\u3000\u3000 Sinosteel Engineering & Technology Co.Ltd(000928) (000928)
Event: the company released the 2021 performance express. In 2021, the company achieved a revenue of 15.888 billion yuan, a year-on-year increase of 7.16%; The net profit attributable to the parent company was RMB 656 million, a year-on-year increase of 9.05%; The net profit attributable to the parent company after deduction was 345 million yuan, a year-on-year decrease of 41.29%.
The annual revenue growth is in line with expectations, and the non recurring profit and loss changes greatly. In 2021, the company achieved a revenue of 15.888 billion yuan, a year-on-year increase of 7.16%; The net profit attributable to the parent company was RMB 656 million, a year-on-year increase of 9.05%; The net profit attributable to the parent company after deduction was 345 million yuan, a year-on-year decrease of 41.29%. During the reporting period, affected by the rise of raw material prices and labor costs, the gross profit margin of the company’s general contracting business decreased, and the net profit attributable to the shareholders of the listed company after deducting non recurring profits and losses decreased significantly year-on-year. Through continuous optimization of cost control and other measures, the gross profit margin of EPC in the second half of the year was higher than that in the first half of the year, and the overall cost of projects in hand was controllable. Changes in the company’s non recurring profits and losses are mainly the disposal income of Chongqing Iron & Steel Company Limited(601005) shares held by the company of RMB 335 million, a significant increase compared with the change in fair value of RMB -93.3923 million in the same period last year.
In the first three quarters, the newly signed orders increased rapidly, and the future development is guaranteed. In the first three quarters of 2021, the company signed new orders of RMB 18.588 billion, a year-on-year increase of 43.61%. Among them, the contract amount in China was 17.934 billion yuan, a year-on-year increase of 58.15%; The foreign contract amount was 654 million yuan, a year-on-year decrease of 59.18%. The growth rate of new orders signed by the company in the first three quarters was high, mainly due to the contribution of Chinese business. By the end of the third quarter of 2021, the company had implemented 281 unfinished projects, with an estimated total revenue of 92.594 billion yuan, a cumulative recognized revenue of 55.439 billion yuan and an expected revenue of 37.155 billion yuan for the unfinished part; There are 31 projects that have signed contracts but have not yet started, with a total contract amount of 18.177 billion yuan. The future development of the company is guaranteed.
Together with China Baowu, the synergy is obvious. In 2020, Baowu steel production will reach 115 million tons, ranking first in China. Previously, China Baowu has promised the society to reduce carbon emissions by 30% to just 1.3 tons per ton in 2035 based on 2020, and strive to achieve carbon neutralization by 2050. It is expected that China Baowu will have a large investment in carbon reduction in the iron and steel industry in the future. Sinosteel Engineering & Technology Co.Ltd(000928) it has the technology integration ability to support the whole process of green development services in the iron and steel industry. In October 2020, China Baowu entrusted the controlling shareholder Sinosteel group. The current chairman of the company also serves as the chairman of China Baowu Design Institute / Baosteel engineering. In the future, the cooperation between the company and China Baowu will be smoother and the synergy effect will be obvious.
Investment advice
It is estimated that the company’s EPS will be 0.63/0.73 yuan / share from 2022 to 2023, and the corresponding dynamic P / E ratio will be 13 / 11 times respectively, maintaining the “recommended” rating.
Risk tips
The risk of increasing industry competition; The risk that the landing of the newly signed contract is less than expected.
