\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 782 Xinyu Iron & Steel Co.Ltd(600782) )
Event: the company released its 2021 annual report. In 2021, it achieved a revenue of 104.9 billion yuan, an increase of 45% year-on-year; The net profit attributable to the parent company was 4.3 billion, a year-on-year increase of 61%; The company also announced the profit distribution plan for 2021. It plans to pay a cash dividend of 5 yuan (including tax) for every 10 shares, with a dividend ratio of 36%. Jiangxi state control will transfer its 51% equity of Xingang group to China Baowu free of charge.
Comments:
Steady profit and outstanding toughness. The net profit attributable to the parent company in Q4 of 2021 was 910 million yuan, approaching the upper edge of the previously released performance forecast; The month on month decline was only about 10%, which was significantly better than the same steel industry with sector as the main industry.
The dividend yield reached 9%, and the dividend amount reached a record high. The dividend amount of the company is up to 1.56 billion yuan, the highest in history; The dividend ratio was 36%, higher than the average level since listing. According to the stock price on April 26, 2022, the corresponding dividend yield is 9%, which is at the industry-leading level.
Transfer Baowu to meet new opportunities for development. Jiangxi state control will transfer its 51% equity of Xingang group to China Baowu free of charge. Xingang group accounts for about 44.81% of the company's share capital. After the completion of this transfer, China Baowu will hold 51% equity of Xingang group and become the controlling shareholder of Xingang group. Since China Baowu is controlled and owned by the SASAC of the State Council, the SASAC of the State Council will become the actual controller of the company. Baowu group has the world's largest production capacity and excellent management level; We believe that the company will fully benefit from the platform resource advantages and excellent management level of China Baowu.
Iron and steel industry: with the reduction of output and the improvement of supply and demand, the profitability of steel mills is expected to be better. In April 2022, the regular meeting of the national development and Reform Commission said that the reduction of national crude steel output will continue in 2022; Previously, the market expected output growth, and some believed that output level control. At present, level control is the bottom line, and there is a high probability of continued production reduction. We believe that after the epidemic eases, steel will usher in a demand recovery outbreak with the superposition of three factors: seasonal demand, infrastructure projects at the beginning of the year and export recovery. It is predicted that steel demand will increase by 1-2% in the whole year. If the production is reduced by 20 million tons, the capacity utilization rate of the industry will continue to improve, the supply and demand will improve, and the profitability of the steel plant is expected to be better.
Profit forecast and investment rating: we expect the company to achieve revenue of 108.1/113.5/114.6 billion yuan from 2022 to 2024, with a year-on-year growth rate of 3% / 5% / 1% respectively; Based on the performance of 2021, we adjusted the net profit attributable to the parent company from 6.9/6.2 billion yuan to 4.5/5 billion yuan from 2022 to 2023, that is, the net profit attributable to the parent company from 2022 to 2024 was 4.5/4 billion yuan, with a year-on-year growth rate of 5% / 10% / - 20% respectively, and the corresponding PE was 3.8/3.5/4.3 times respectively. Considering the company's high dividend yield, strong profitability toughness and undervalued value, the "buy" rating of the company is maintained.
Risk warning: price fluctuation of raw materials and risk of supply; The demand is less than expected.
