\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 507 Fangda Special Steel Technology Co.Ltd(600507) )
Event: the company released the first quarterly report of 2022. In 2022q1, the company realized an operating revenue of 5.232 billion, a year-on-year increase of 29.46%; The net profit attributable to the parent company was 540 million, with a year-on-year increase of - 2.08%.
Comments:
The profitability is leading the industry, and the gross profit margin remains high. In 2022q1, the net profit attributable to the parent company decreased by 2% year-on-year and 8% month on month respectively; However, compared with the performance of the steel industry, the company's profit toughness is leading the industry, and the company's gross profit margin is still maintained at more than 15%, far exceeding the industry average.
The management advantage is obvious, and the equity incentive regenerates vitality. Under the differentiated core cost strategy, Fangda Special Steel Technology Co.Ltd(600507) by controlling the cost of non raw materials such as labor, depreciation, energy and manufacturing expenses, improve labor productivity and reduce the total internal cost. According to the newly disclosed 2021 annual report, the roe of Fangda Special Steel Technology Co.Ltd(600507) in 2021 reached 28.9%, and it has been in the leading position in the industry for the decade from 2011 to 2020, and has basically maintained a high roe of more than 20%. In addition, Fangda Special Steel Technology Co.Ltd(600507) since its listing, it has launched three equity incentive plans, including the stock option plan in 2012 and 2017 and the restricted stock incentive plan in 2021.
High dividend, value investment model For Fangda Special Steel Technology Co.Ltd(600507) years, it has maintained a high dividend frequency and high dividend yield, which has brought a high return on investment to investors. From 2020 to 2021, the dividend payment rate of Fangda Special Steel Technology Co.Ltd(600507) company is as high as 110% and 88%, and the dividend rate is 15.9% and 14.2% respectively. Such a high dividend rate is also rare in the industry.
Follow up asset injection is huge. Dongfang iron and Steel Group, the controlling shareholder of the listed company, will participate in the acquisition of Pinggang shares as a transition and promise to succeed in the acquisition. When the time is ripe, it will inject Fangda Special Steel Technology Co.Ltd(600507) . As one of the three major iron and steel plants in Jiangxi, Pinggang will still give the company growth in the future.
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 predict that the company's revenue from 2022 to 2024 will be 23.9/24/24.3 billion yuan respectively, with a year-on-year growth rate of 10% / 1% / 1% respectively; Based on the company's 2022q1 profit, we maintain that the company's net profit attributable to the parent company from 2022 to 2024 is RMB 3.1/32/3 billion respectively, with a year-on-year increase of 14% / 4% / 3% respectively; The corresponding PE is 5.8/5.6/5.4x respectively. Considering that the company's valuation is at a historically low level, the roe is significantly higher than that of its peers and the profitability is strong, the "buy" rating of the company is maintained.
Risk tips: the demand is less than expected, the price of raw materials fluctuates, and the company's own business risks.
