\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 782 Xinyu Iron & Steel Co.Ltd(600782) )
Event overview: on April 26 and 29, the company successively released the 2021 annual report and the first quarterly report of 2022: in 2021, the company achieved a revenue of 104913 billion yuan, a year-on-year increase of 44.88%; The net profit attributable to the parent company was 4.345 billion yuan, a year-on-year increase of 60.90%, while the net profit not attributable to the parent company was 4.084 billion yuan, a year-on-year increase of 66.53%. The company’s revenue was 19.44 billion yuan, a year-on-year decrease of 19.64 billion yuan, a decrease of 6.86% over the same period last year; The net profit attributable to the parent company was 915 million yuan, with a year-on-year increase of 12.45% and a month on month decrease of 10.79%; The net profit deducted from non parent company was 858 million yuan, a year-on-year decrease of 5.34% and a month on month decrease of 9.97%. In 2022q1, the company achieved a revenue of RMB 26.002 billion, a year-on-year increase of 2.76% and a month on month increase of 33.57%; The net profit attributable to the parent company was 1.03 billion yuan, an increase of 6.12% year-on-year and 12.65% month on month; Net profit deducted from non parent company was 861 million yuan, a year-on-year decrease of 2.04% and a month on month increase of 0.33%.
Comments: the company’s output increased steadily and Q1 performance improved
① output: the output of crude steel will increase steadily in 2021. In 2021, the company completed a crude steel output of 101379 million tons, with a year-on-year increase of 8.08%. The output of reinforcement increased by 7.87% year-on-year, and the sales volume increased by 11.41% year-on-year; The output of medium and heavy sector increased by 6.9% year-on-year, and the sales volume increased by 8.14% year-on-year; The output of hot rolled coil increased by 3.24% year-on-year, and the sales volume increased by 1.33% year-on-year.
② price: in 2021, the raw materials rose sharply, the gross profit margin increased, and the cost reduction strategy made a breakthrough. 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%. However, the company continued to firmly promote the whole process cost reduction, and the unit operating cost increased by only 41.63%, while the unit price of products increased by 42.37%, resulting in a year-on-year increase in gross profit margin of 0.4pct to 6.32%. Quarterly, due to the impact of reduced demand on Q4, steel prices fell sharply, resulting in a month on month decline of 374 million yuan in gross profit.
③ the net profit attributable to the parent company of 2022q1 increased month on year. The main profit increase point is that the recovery of steel price makes the gross profit rise and the credit impairment loss turn back; The main profit reduction point is the year-on-year increase in administrative expenses.
The core focus in the future: the product structure is gradually optimized, and Baowu enters the main and powerful combination
① gradually optimize the product structure and continuously promote cost reduction and efficiency increase. The company is an important steel producer and manufacturer in China and a large-scale steel complex with an annual production capacity of 10 million tons of crude steel. The company continues to promote cost reduction and efficiency increase. At the same time, it unswervingly follows the high-quality strategy, improves the supply of medium and high-end products, expands high value-added varieties such as oriented silicon steel, wheel steel and automobile girder steel, and seizes the medium and high-end customer market.
② on April 23, 2022, Jiangxi state-controlled will transfer 51% of its equity of Xingang group to China Baowu free of charge, while maintaining the independence of Xinyu Iron & Steel Co.Ltd(600782) operation. China Baowu’s entry into new steel will drive Xinyu Iron & Steel Co.Ltd(600782) to achieve leapfrog development, expand the state-owned economy of Jiangxi Province, and help build a world-class platform for technological innovation, industrial investment and capital operation in the field of iron and steel.
③ profit forecast and investment suggestions: the company’s product structure is gradually optimized and cost reduction and efficiency increase are promoted at the same time. We predict that the net profit attributable to the parent company in 202224 is expected to be RMB 4.464/49.28/5.032 billion in turn, and the PE corresponding to the closing price on April 29 is 4x, 4x and 4x. It is covered for the first time and given the rating of “recommendation”.
Risk tip: the price of raw materials is rising, the downstream demand is lower than expected, and the covid-19 epidemic continues to affect.
