\u3000\u3 China Vanke Co.Ltd(000002) 110 Sansteel Minguang Co.Ltd.Fujian(002110) )
The operation was stable and the performance decreased slightly month on month. In 2021, the company conscientiously implemented the policies of production and power restriction, actively coordinated production and operation, organized production according to the difference of variety benefits, and continuously expanded procurement channels to deal with the adverse impact of the rise of raw fuel prices. In 2021, the total operating revenue was 62.753 billion yuan, a year-on-year increase of 29.02%; The net profit attributable to shareholders of listed companies was 3.979 billion yuan, a year-on-year increase of 55.69%. In the first quarter, the company realized an operating revenue of 12.841 billion yuan, down 8.91% month on month; The net profit attributable to shareholders of listed companies was 532 million yuan, down 14.24% month on month.
Regional leaders, the price of products is higher than that of surrounding cities. The company has an annual steel production capacity of more than 12 million tons. In 2021, the company produced 11.4 million tons of steel, a year-on-year increase of 0.29%. The company is deeply rooted in the Fujian market and radiates to the surrounding provinces. Benefiting from the advantages of regional economic development, the demand for steel is booming, and the sales price of products is higher than that of surrounding cities for a long time. In 2021, the average price of deformed steel bar and medium sector in Fuzhou is 44 yuan / ton and 228 yuan / ton higher than that in Shanghai.
Reduce costs and increase efficiency, and tap potential. In terms of cost reduction, the company focuses on strengthening production coordination and supply and marketing management, and continues to promote the whole process cost reduction of each base. In terms of transformation and upgrading, the company’s capacity replacement and upgrading project continues to be promoted. In 2022, the construction of phase II of coke oven upgrading and transformation, new 1 blast furnace, bloom caster, medium and large bar production line and other projects will continue to be promoted, and the main iron and steel industry will continue to strengthen development.
High proportion of cash dividend returns to shareholders. The company plans to distribute a cash dividend of RMB 8.2 (including tax) to all shareholders for every 10 shares. It is estimated that the cash dividend of the company in 2021 will be RMB 1.992 billion, accounting for 50.06% of the net profit attributable to shareholders of Listed Companies in the consolidated statements of 2021. Corresponding to the closing price on April 27, 2022, the dividend yield reached 11.9%.
The steel industry is expected to maintain a stable operation with the superposition of coarse steel and steady growth. In April, the national development and Reform Commission made a clear statement to ensure the year-on-year decline of national crude steel output in 2022. The pressure drop of crude steel output will help the industry maintain a stable operation and restrain the price of iron ore. The profit of the black industrial chain is expected to tilt to the end of the steel plant again. At the same time, in order to prevent the risk of hard landing, the regulation policies of local real estate markets tend to be liberalized, and the policies are still increasing, which helps to improve market sentiment. The growth rate of infrastructure investment is also expected to stabilize with the steady growth policy, so as to drive steel consumption and play the role of counter cyclical regulation.
Risk warning: the demand side has fallen more than expected; The implementation of crude steel output reduction policy is less than expected; The price fluctuation of raw materials exceeded expectations.
Investment suggestion: as a regional leader, the company enjoys market premium and steady dividend. Considering the high price of raw materials, we lowered our performance forecast. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be 3.28/33.7/3.49 billion yuan (41.6 / 43.3 / -), with a year-on-year growth rate of – 17.5% / 2.5% / 3.6%; Diluted EPS is 1.34/1.37/1.42 yuan, and the corresponding PE of the current stock price is 5.1/5.0/4.8x, maintaining the “overweight” rating.
