\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 581 Xinjiang Ba Yi Iron & Steel Co.Ltd(600581) )
Event overview: on April 11, the company released its 2021 annual report: in 2021, the company achieved a revenue of 30.879 billion yuan, a year-on-year increase of 33.62%; The net profit attributable to the parent company was 1.181 billion yuan, a year-on-year increase of 267.67%; The net profit deducted from non parent company was 1.083 billion yuan, with a year-on-year increase of 323.4%. In 2021q4, the company achieved a revenue of 5.953 billion yuan, a month on month decrease of 19.99%; The net profit attributable to the parent company was -1.166 billion yuan, deducting the net profit not attributable to the parent company of -1.269 billion yuan, which turned from profit to loss month on month.
Comments: the production and sales volume of the company's main products increased, and the gross profit margin remained stable
① volume: the production and sales volume of the company's products increased year-on-year in 2021. In 2021, the company's steel output was 6.42 million tons, with a year-on-year increase of 2.65%, of which the output of building materials products was 2.25 million tons, with a year-on-year increase of 4.3%, and the sales volume was 2.26 million tons, with a year-on-year increase of 2.54%; The output of sector products was 3.11 million tons, a year-on-year increase of 3.85%, and the sales volume was 3.0915 million tons, a year-on-year increase of 2.63%.
② price: the price of deformed steel bar increased relatively, and the total gross profit margin remained stable. In 2021, the price of iron ore, the main raw material of iron and steel products, was + 49.06%, the price of main coking coal was + 80.75%, the price of coke was + 50.08%, and the price of scrap steel was + 29.69%. Facing the pressure of sharp rise in raw materials, the core of the company focused on improving production and use efficiency, determined the whole process, deepened cost reduction, and maintained a stable total gross profit margin under the new accounting standards.
Future core focus
① in 2021, the growth rate of fixed asset investment in Xinjiang was higher than the national average, and the demand potential for steel was great. As a key area of western development, thanks to the policy dividends, stability dividends and epidemic prevention and control dividends being released intensively, the growth rate of fixed asset investment in Xinjiang is significantly higher than the national average, and the demand potential is large.
② Xinjiang has a high market share and obvious regional leading advantages. Xinjiang is located inland with poor transportation conditions. As the largest steel plant in Xinjiang, the company has obvious regional advantages, and its products have high brand awareness in Xinjiang and Northwest China. From January to June 2021, the market share of the company's building materials in Xinjiang was 35.5%, and the sector reached 81%.
③ equity incentive helps the long-term development of the company. The company issued the A-share restricted stock incentive plan in 2021 and made requirements for the return on net assets, profit and EVA of the company, which is conducive to attracting and retaining excellent talents, fully mobilizing the enthusiasm of core employees and laying a solid foundation for the long-term development of the company.
④ acquire subsidiaries of controlling shareholders to achieve the best resource allocation. On December 21, 2021, the company completed the acquisition of Xinjiang coking coal (Group) Co., Ltd. and Xinjiang Bagang metal products Co., Ltd., which extended Xinjiang Ba Yi Iron & Steel Co.Ltd(600581) industrial chain and helped the company maximize the utilization value of resources in Xinjiang.
Profit forecast and investment suggestions: Xinjiang has great demand potential for iron and steel, and the company has obvious regional leading advantages. At the same time, deepen the layout of the industrial chain, and the performance is expected to maintain stable growth. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.404/1.641/1.788 billion in turn, and the PE corresponding to the closing price on April 12 will be 8x, 7x and 6x. It will be covered for the first time and given a "recommended" rating.
Risk warning: the price of raw materials fluctuates sharply, the downstream demand is less than expected, and the covid-19 epidemic continues to affect the market
