\u3000\u3 Shengda Resources Co.Ltd(000603) 995 Zhejiang Yongjin Metal Technology Co.Ltd(603995) )
Event: the company released the first quarter report of 2022. In the first quarter of 2022, the company achieved a revenue of 8.26 billion yuan, a year-on-year increase of 31.9%; The net profit attributable to the parent company was 130 million yuan, a year-on-year increase of 17.7%; The net profit attributable to the parent company after non deduction was 121 million yuan, a year-on-year increase of 11.9%.
The scale of production and marketing continued to improve, and the revenue increased significantly year-on-year. In the first quarter, the company’s 300 series cold-rolled stainless steel sector output was 476000 tons, a year-on-year increase of 7.2%, a month on month increase of 5.3%, and the sales volume was 457000 tons, a year-on-year increase of 8.2% and a month on month increase of 5.2%; The output of 400 series cold-rolled stainless steel sector was 74000 tons, with a year-on-year increase of 15%, a month on month increase of 4.7%, and the sales volume was 67000 tons, with a year-on-year increase of 8.5% and a month on month decrease of 6.1%. According to historical data, due to the factors of lunar holidays, the output in the first quarter was slightly higher than the sales volume, and some output was sold in the second quarter. While the company’s production and sales scale increased significantly, the product price rose simultaneously. In the first quarter, the price of 300 series cold-rolled stainless steel sector increased by 22.7% year-on-year, and the price of 400 series cold-rolled stainless steel sector increased by 8.4% year-on-year. Under the joint influence of the above factors, the company’s revenue in the first quarter increased by more than 30% year-on-year.
Affected by price factors, the net sales interest rate fell, and the data of ton steel caliber continued to improve. In the first quarter, the gross profit margin of the company’s sales was 4.74%, down 0.6pct year-on-year, and the net profit margin of sales was 1.85%, down 0.26pct year-on-year, mainly because the processing fee of the company’s main products was relatively fixed, and the net profit margin decreased slightly under the influence of the sharp rise in prices; Without considering the business of non cold rolled stainless steel sector, the estimated gross profit per ton of cold rolled stainless steel sector in the first quarter was 747 yuan / ton, with a year-on-year increase of 28.9% (the freight in 2021q1 has been retroactively adjusted), the estimated net profit per ton of steel was 293 yuan / ton, with a year-on-year increase of 7%. The gross profit per ton of cold rolled stainless steel sector and strip business in 2021 was 726 yuan / ton, and the estimated net profit per ton of steel was 311 yuan / ton. The diameter data per ton of steel in the first quarter continued to improve year-on-year.
Multiple projects have been steadily promoted, and the product structure has been further optimized while the scale has been improved. On March 23, the precision stainless steel sector and belt project with an annual capacity of 250000 tons in Yongjin, Vietnam was officially put into operation. On April 10, the precision stainless steel sector and belt project with an annual output of 220000 tons in Yongjin, Gansu Province was officially started. At the same time, several raised investment projects were under normal progress. According to the capacity progress of the projects under construction currently publicized, it is estimated that the annual compound growth rate of the company’s capacity from 2022 to 2024 will be 28.5%, and the annual compound growth rate of warehousing output will be 30.3%; At the same time, the company actively arranges the high gross profit production line. The output proportion of high gross profit products such as 300 and 400 series wide Ba board, precision board, stainless steel water pipe and composite products is expected to increase from 20% in 2021 to 25.8% in 2024, driving the continuous rise of the company’s profitability;
Investment advice. The company focuses on the cold rolling processing of stainless steel and occupies an advantage in the competition of mainstream products. Relying on the channels of many leading stainless steel hot rolling enterprises, the company rapidly expands its production capacity. Its order production mode, high production capacity growth and product structure transformation will effectively support its profit release. The scarcity, high growth and broad market space are expected to support its higher valuation. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 810 million yuan, 1.28 billion yuan and 1.4 billion yuan respectively, EPS will be 346 yuan, 548 yuan and 601 yuan respectively, and the corresponding PE will be 12.6, 7.9 and 7.2, maintaining the “buy” rating.
Risk tips: the price of upstream raw materials fluctuates sharply, the rapid increase of production capacity leads to the unexpected decline of processing fees, the demand for stainless steel sectors is lower than expected due to epidemic factors, and there is uncertainty in the development of new business.
