\u3000\u3000 Fushun Special Steel Co.Ltd(600399) (600399)
Events
The company released the performance forecast for 2021 on the evening of January 13. It is expected to realize the net profit attributable to the parent company of RMB 728 million-815 million in 2021, with a year-on-year increase of 31.98% – 47.74%; The net profit deducted from non parent company was 643 million yuan to 704 million yuan, with a year-on-year increase of 26.07% – 38.03%.
Commentary
Power and production restriction + cost rise, Q4 performance was lower than expected. Q4 realized a net profit attributable to the parent company of 43-130 million yuan in a single quarter, a year-on-year decrease of 12% – 71%, and the performance was lower than expected. Q4 affected by the power and production restriction policy of iron and steel, the prices of some important raw materials may continue to rise, the procurement cost of raw materials will rise, and the production and sales volume of the company’s products will decrease year-on-year; Affected by the continuous rise of international natural gas prices, the company’s energy costs rise. With the accelerated reform of electricity price marketization, the periodic rise of electricity price will directly affect the company’s production costs.
The “three high and one special” production capacity continued to expand. According to the announcement of the company, the engineering construction project of homogeneous high strength and large specification superalloy and ultra-high strength steel is expected to be put into operation around June 2022; The new 70MN fast forging machine technical transformation project of the forging plant is expected to be put into production in early 2022, and the two projects are expected to increase the production capacity by 40000 tons. The equipment of phase I project of industrialization technical transformation of superalloy and high strength steel is expected to be put into production in the second half of 2022; The new 22MN precision forging machine production line and ancillary facilities project of the forging plant is expected to be put into production in the second half of 2023, and the two projects are expected to increase the production capacity by 44000 tons. The new high alloy small bar production line and ancillary facilities project of Shilin company is expected to be completed by the end of 2022, which can increase the production capacity by 40000 tons.
High temperature alloy leader, optimistic about long-term development opportunities. The high-temperature alloy produced by the company occupies more than 80% of the aerospace market and the ultra-high strength steel occupies 95%. The future main demand for superalloys comes from the large volume of military products and domestic aircraft during the 14th Five Year Plan period. The characteristics of high industrial technical barriers and high production capacity concentration make the company’s products have higher added value and greater performance flexibility. In 2021, the domestic aircraft C919 will be officially mass produced. According to the military and civil aviation increment, the demand for superalloy will be 31000 tons in 2025, with an annual growth rate of 3.1%.
Profit forecast & investment suggestions
According to the performance forecast of 2021, the company’s net profit attributable to the parent company for 21 years is reduced by 13%. It is expected that the net profit attributable to the parent company in 21-23 years will be 777 million yuan, 1136 million yuan and 1371 million yuan respectively, and the EPS will be 0.39 yuan, 0.58 yuan and 0.70 yuan respectively, corresponding to 63 times, 43 times and 36 times of PE respectively. Maintain the “buy” rating.
Risk tips
The output release of high-end products did not meet expectations; The price of raw materials fluctuates greatly; Demand growth did not meet expectations.
