\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 019 Baoshan Iron & Steel Co.Ltd(600019) )
Event overview: on April 28, the company released its 2021 annual report and the first quarterly report of 2022: in 2021, the company achieved a revenue of 365342 billion yuan, a year-on-year increase of 28.4%; The net profit attributable to the parent company was 23.632 billion yuan, a year-on-year increase of 86.4%; The net profit deducted from non parent company was 23.525 billion yuan, an increase of 89.2% year-on-year. In 2021q4, the company achieved a revenue of 86.392 billion yuan, an increase of 3% year-on-year and a decrease of 7.3% month on month; The net profit attributable to the parent company was 2.042 billion yuan, a year-on-year decrease of 57.6% and a month on month decrease of 68.6%; The net profit deducted from non parent company was 2.515 billion yuan, a year-on-year decrease of 45.3% and a month on month decrease of 60.9%. In 2022q1, the company achieved a revenue of 86.261 billion yuan, a year-on-year increase of 2.9% and a month on month decrease of 0.2%; The net profit attributable to the parent company was 3.732 billion yuan, a year-on-year decrease of 30.4% and a month on month increase of 82.8%; The net profit deducted from non parent company was 3.493 billion yuan, a year-on-year decrease of 32.9% and a month on month increase of 38.9%.
Comments: the company’s output continued to increase and its gross profit margin increased
① volume: the production and sales volume of the company increased steadily in 2021. In 2021, the output of steel products of the company was 46.58 million tons, with a year-on-year increase of 1.56%, and the sales volume was 46.33 million tons, with a year-on-year increase of 1.30%. Among them, the output of cold rolling increased by 4.87% year-on-year, and the sales volume increased by 4.4% year-on-year; The output of hot rolling increased by 5.92% year-on-year, and the sales volume increased by 5.17% year-on-year.
② price: deepen cost reduction and increase the company’s annual gross profit margin. In 2021, the price of iron ore, the main raw material of steel, 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 rising raw materials, the company deepened the cost reduction work, and the cost increased by only 22.22%, while the unit price increased by 25.60% year-on-year, and the total gross profit margin increased by 2.42pct to 13.49% year-on-year. In the quarter, due to the decline of steel prices, the gross profit margin fell by 4.5pct month on month, dragging down the company’s Q4 performance.
③ the performance of 2022q1 was lower than expected. Although the price of iron ore fell year-on-year, the price of coking coal and other raw materials increased significantly. The cost compression narrowed the price difference between the purchase and sales of steel, and the sales volume of the company’s products decreased by 7.41% year-on-year, resulting in a year-on-year decline of 3.836 billion yuan in the company’s gross profit, which dragged down the performance of Q1.
Core focus in the future: the scale effect of leading enterprises appears, and product optimization is accelerated
① optimize the coal and ore blending structure to realize the limit cost reduction. Under the background of limited production and energy, the company further optimized the product structure with the cost reduction strategy as the core, and completed the cost reduction plan of 1.15 billion yuan for the whole year.
② the company’s output continued to increase and the optimization of product structure accelerated. At present, the new third blast furnace system project in Dongshan base has been put into operation. The hydrogen based shaft furnace system project of Baosteel Zhanjiang iron and steel proposed by its subsidiary Zhanjiang iron and steel is expected to be put into operation by the end of 2023. The output of steel products of the company is expected to continue to increase. At the same time, the company approves the new round of silicon steel capacity development plan. The output of silicon steel products is expected to further increase and the optimization of products of the company is accelerated.
③ equity incentive helps the long-term development of the company. In order to fully mobilize the enthusiasm of employees, the company plans to grant no more than 500 million restricted shares, accounting for about 2.25% of the total share capital of the company at the time of announcement of the draft plan.
Profit forecast and investment suggestion: the leading scale effect is significant, the company’s output is expected to be further improved, and the product structure is expected to be further optimized. We predict that the company will realize net profit attributable to the parent company of 26.484 billion yuan, 27.993 billion yuan and 29.022 billion yuan from 2022 to 2024. The PE corresponding to the closing price on April 29 is 5, 5 and 5 times respectively. It is covered for the first time and given a “recommended” rating.
Risk tip: the price of raw materials is rising, the downstream demand is lower than expected, and the covid-19 epidemic continues to affect.
