Nangang Iron & Steel (600282) Company Comment: The Company’s Profit Continuation Is Relatively Stable
Performance summary: The company released the report for the third quarter of 2019 and achieved operating income of 367 in the first three quarters.
3 ‰, an increase of 9 in ten years.
2%; net profit attributable to shareholders of listed companies23.
75 ppm, a reduction of 30 per year.
9%; net profit after deduction is 21.
43 ppm, a reduction of 36 per year.
The EPS in the first three quarters of this year was 0.
54 yuan, single quarter EPS are 0.
19 yuan, 0.
23 yuan, 0.
12 yuan; the company ‘s profitability continues to be relatively stable: Since the beginning of this year, due to the relaxation of environmental protection and production restrictions, the replacement of production capacity, and the improvement of the company ‘s own production efficiency, the supply side has continued to grow.The industry’s budget profit has been extended.
From the perspective of some listed steel companies with recent performance, most companies’ net profit intervals in the first three quarters have changed by 40-70%. Nangang ‘s performance has dropped significantly more than the industry average, reflecting the relative stability of the company ‘s product earnings.
Specifically, the heavy plate, which accounts for nearly half of the company’s product structure, has made great contributions. According to the number of reports, the domestic plate price index fell by 8.
5%, and the company benefited from the long-term continuous optimization of the variety structure, and the average reduction in the growth of medium and heavy plates.
In addition, the company’s production and sales increased, the company’s steel output and sales from January to September were 756 and 752 variables, respectively, while increasing.
1% and 6.
From a quarterly perspective, in the third quarter, taking into account the cyclical factors of steel companies’ raw material inventory, the rapid rise in iron ore prices in June had a lagging effect on earnings in July.The company ‘s profit has shrunk rapidly. The profit in the third quarter has reached a new low for the year. The company ‘s profit trend is in line with the industry. The net profit in the third quarter has dropped 47% from the previous quarter.Due to the expansion of new technologies, new processes and new products; financial expenses decreased by 32%, mainly due to the gradual decline in financing scale and unit financing costs; investment income increased by 291%, thereby accounting for long-term equity equityInvestment income and investment income of derivative financial instruments increased; non-operating expenses increased by 515%, mainly due to the implementation of environmental protection projects during the reporting period to demolish some fixed assets; minority shareholders’ profit and loss promoted elimination: the company issued an announcement in early May, intending to report to the controlling shareholder Nanjing SteelLian shares to purchase Nangang Development 38.
72% equity, Jinjiang Furnace Charge 38.
72% equity. After the transaction is completed, the target company will become a wholly-owned subsidiary of the listed company.
Through the acquisition of a minority stake in a listed company’s controlling subsidiary, the company’s net assets and net profit attributable to the owner of the parent company will be enhanced, which will help increase the profit of the listed company and protect shareholders’ interests.
Assuming that the plan is successfully implemented, taking 2018 as an example, the net profit thickening ratio of the mother is 17.
6%; investment advice: benefit from the continuous optimization of the brand structure, the company’s plate profit performance is relatively stable, the profit scale is significantly lower than 成都桑拿网 the industry level.
Subsequent acquisitions of minority stakes in holding subsidiaries will be completed again, which will effectively increase the profits of listed companies.
At present, the downstream demand is still stable, the recent improvement in environmental protection and production restrictions is tightened, the supply and demand side is strong, and the industry is struggling to stabilize its profits. There is a chance for steel stocks to rebound under the background of macro expectations.
The company’s EPS for 2019-2021 is expected to be 0.
72 yuan, 0.
83 yuan and 0.
88 yuan, the corresponding PE is 4 respectively.
8X and 3.
6X, maintain “overweight” rating; risk warning: macroeconomic expectations, supply-side increased risks, asset restructuring is less than expected.