\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 019 Baoshan Iron & Steel Co.Ltd(600019) )
Event: in 2021, the revenue was 364349 billion yuan, a year-on-year increase of + 28.4%, and the net profit attributable to the parent company was 23.632 billion yuan, a year-on-year increase of + 86.42%; In 2021q4, the revenue was 86.127 billion yuan, a month on month ratio of – 7.36%, a year-on-year ratio of + 2.96%, and the net profit attributable to the parent company was 2.042 billion yuan, a month on month ratio of – 68.64%, a year-on-year ratio of – 57.62%; In 2022q1, the revenue was 85.980 billion yuan, a month on month increase of – 0.17% and a year-on-year increase of + 3.78%; The net profit attributable to the parent company was 3.732 billion yuan, a month on month increase of + 82.78% and a year-on-year decrease of – 30.41%. In 2021, the company’s steel output was + 1.5% year-on-year, and the gross profit per ton of steel was + 64%. In 2021, the output of steel products was 46.33 million tons, with a year-on-year increase of + 1.5%, including 38.57 million tons of coiled sector, with a year-on-year increase of + 5.41%, and 3.73 million tons of long wood, with a year-on-year increase of – 6.05%; In 2021, the gross profit of steel products per ton of steel was 765 yuan, a year-on-year increase of + 64%, of which the gross profit of coiled sector was 907 yuan / ton, a year-on-year increase of + 68.4%, and the gross profit of long products was 124 yuan / ton, a year-on-year increase of – 72.3%. The short board base achieved remarkable potential tapping results, and the net profit of Qingshan and Meishan reached a five-year high: the company implemented the three-year improvement plan from 2021 to 2023 for Qingshan and Meishan bases. In 2021, the net profit per ton of steel of Qingshan and Meishan bases were 322 and 480 yuan / ton respectively, with a year-on-year increase of 626% and 528%, with an average value of about 300 yuan / ton lower than that of Baoshan and Dongshan bases. In 2021, the net profits of Qingshan and Meishan bases were 4.92 billion yuan and 3.53 billion yuan respectively, with a year-on-year increase of 657% and 530%, reaching a new high since 2017.
In 2022, the third blast furnace in Dongshan base will be put into operation, and the steel sales volume of the company is expected to be + 6.81% year-on-year. The No. 3 blast furnace of Zhanjiang base (with an annual capacity of 3.6 million tons of crude steel) was ignited in January 2022. The company plans to sell 49.75 million tons of steel in 2022, with a year-on-year increase of 6.81%. Among them, the sales of Q1 steel in 2022 is 11.12 million tons, with a year-on-year increase of + 5.85%, and the sales of q2-q4 steel is expected to be 38.63 million tons, with a year-on-year increase of + 7.34%.
The product structure was continuously optimized, and the company’s silicon steel structure optimization phase I and phase II projects were carried out in an orderly manner. In 2021, the company will build a new high-grade non oriented silicon steel line, and plans to start the thermal load test run of the whole line at the end of February 2023. The oriented silicon steel product structure optimization (Step II) project has been approved. In 2022q1, the company’s orders for oriented silicon steel increased by 15.4% year-on-year, of which the orders for top brands increased by 176%, and actively explored the non oriented silicon steel market. The sales volume of non oriented silicon steel for new energy driven motors reached a record high, of which the sales volume of Qingshan base was + 157%.
High dividend and high performance guarantee enhance the company’s medium-term investment value. The dividend ratio of the company in 2021 is 55.4%, and the dividend rate calculated corresponding to the share price on April 28 is 9.31%; According to the report “friendly policies, low valuations, and firmly optimistic about medium-term investment opportunities in the steel sector” issued on April 13, the company’s non net profit attributable to the parent company from 2022 to 2024 is 15.1/16.6/18.2 billion yuan respectively according to the equity incentive exercise conditions, and the PE is 9.3/8.5/7.7 times corresponding to the stock price on April 28.
Profit forecast, valuation and rating: due to the sharp rise in the cost of the iron and steel industry, we lowered the profit forecast of Baoshan Iron & Steel Co.Ltd(600019) 2022-2023 by 36.14% and 38.01% to 18.046 and 18.54 billion yuan, corresponding to EPS of 0.81 and 0.83 yuan, and increased the profit forecast of 2024 to 19.343 billion yuan, corresponding to EPS of 0.87 yuan. Baoshan Iron & Steel Co.Ltd(600019) as the industry leader, the product structure will continue to be optimized in the future to maintain the “overweight” rating of the company.
Risk tip: the terminal demand for steel is declining; Rising raw material prices; The rise in steel prices raises the risk of government regulation.
