\u3000\u3000 Zhejiang Yongjin Metal Technology Co.Ltd(603995) (603995)
Key investment points
Take a global view and actively layout
With the global economic recovery, the demand for stainless steel in overseas markets is growing rapidly. Overseas stainless steel prices have been higher than those in the Chinese market for a long time. The establishment of Yongjin in Indonesia will accelerate the global layout of the company. At present, the company has successively promoted three overseas bases: Yongjin in Vietnam, Yongjin in Thailand and Yongjin in Indonesia, and the corresponding production line capacity is 250000 tons, 260000 tons and 700000 tons respectively. According to the company’s project construction cycle, the company’s offshore capacity will be put into operation and reach production successively from 2023 to 2025. At the same time, the products of overseas production bases will mainly face the overseas market. As the price of overseas stainless steel is higher than that in China, the profit margin of the company’s overseas products will be higher than that in China. With the production of overseas production capacity, the overall profit margin of the company is expected to be significantly improved.
Continuous growth of cold rolled stainless steel leaders
As a leading enterprise in the field of stainless steel cold rolling, the company has realized the advantages of scale and cost through many years of operation. Under the deep integration with Qingshan group, the profit level of the company’s products has remained stable for a long time. At the same time, with the overseas layout and the production and production of high value-added products, plus the continuous expansion of the company’s scale in the next 4-5 years, the company has the dual driving force of “profit thickening + scale growth”, and the company will continue to grow in the future.
Profit forecast and valuation
As the leader of cold-rolled stainless steel, the company has a stable profit space. The continuous increase of production capacity will continue to help the company’s performance growth. It is estimated that from 2021 to 2023, the company’s operating revenue will be 258.63/350.92/455.22 yuan respectively, and the net profit attributable to the parent company will be 584/811/1.040 billion yuan, with a year-on-year growth rate of 40.93%, 38.80% and 28.32% respectively, and the corresponding EPS will be 2.51/3.48/4.46 yuan respectively. According to the closing price on January 12, the corresponding PE is 23.33/16.81/13.10 times respectively. The company has high growth certainty and maintains the “buy” rating.
Risk tips: the construction and operation of new projects are less than expected, the downstream demand is less than expected, and the company’s business governance.
