\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 019 Baoshan Iron & Steel Co.Ltd(600019) )
Event:
The company announced that the annual net profit attributable to the parent company in 2021 was 23.6 billion yuan, a year-on-year increase of 86%; In 2022q1, the net profit attributable to the parent company was 3.7 billion yuan, a year-on-year decrease of 30%. The company’s dividend plan for the second half of 2021: cash dividend of 0.25 yuan per share.
Comments:
Rising raw fuel prices put pressure on performance. Due to the sharp increase in the price of 2021q4 power coal and ferroalloy, the company’s gross profit margin weakened significantly, with a gross profit margin of only 6.0%, down 8.7pct month on month; In 2022q1, the supply and demand of China’s steel market are both weak, and the price of raw materials is rising, so the gross profit margin is only 9.8%, down 4.7cpt year-on-year.
Continue a large proportion of dividends, with a rolling dividend rate of nearly 10%. According to our calculation, the annual dividend of the company in 2021 is 13.1 billion yuan, with a dividend proportion of 55%, which continues the large proportion of dividend of the company; The annual dividend per share was 0.6 yuan, and the rolling dividend rate in 2021 was nearly 10%.
It is proposed to implement the third phase of equity incentive. The company issued the third draft of equity incentive: it plans to grant shares accounting for no more than 2.25% of the total share capital, covering 4000 senior executives such as the general manager, the Secretary of the board of directors and various backbones. The assessment conditions are that the roe from 2022 to 2024 shall not be less than 8%, 8.5% and 9.0% respectively. The grant price is 4.29 yuan per share. We believe that the company is expected to have a wide range of incentives to stimulate the enthusiasm of production and business.
Cost reduction continued to deepen: in 2021, the company achieved cost reduction of 1.15 billion yuan, exceeding the annual target and effectively supporting the company’s operating performance. The fee reduction process of 2022q1 company was promoted, and the management fee rate decreased to 1.1%, a year-on-year decrease of 0.5 percentage points; The sales expenses decreased to 0.5%, a year-on-year decrease of 0.3 percentage points; Financial expenses remained at 0.5%.
Iron and steel industry: supply and demand improved under production reduction. The regular meeting of the national development and Reform Commission said that it would continue to reduce output in 2022; At present, horizontal control is the bottom line, and there is a high probability of continued production reduction. After the epidemic situation is alleviated, the steel industry will face a triple demand recovery of seasonality and the superposition of project delay and export at the beginning of the year. It is predicted that the steel demand will increase by 1-2% in the whole year; Steel fundamentals are expected to usher in a situation of rising steel prices and increasing profits.
Profit forecast and investment rating: we expect the revenue from 2022 to 2024 to be 337.2/381369.6 billion yuan respectively, with a year-on-year growth rate of – 8% / 13% / – 3% respectively; Based on the company’s 2022q1 performance, we adjusted the company’s net profit attributable to the parent company from 32.5/31 billion yuan to 22 / 25 billion yuan from 2022 to 2023, that is, the company’s net profit attributable to the parent company from 2022 to 2024 was 22 / 25 / 24 billion yuan, with a year-on-year growth rate of – 7% / 13% / – 4% respectively, corresponding to PE of 6.4/5.6/5.9x respectively, and the valuation is still at a historical low level; Therefore, the “buy” rating of the company is maintained.
Risk warning: downstream demand is less than expected; Cost control is less than expected.
