Sangang Minguang (002110) semi-annual report comment: high costs compress the gross profit space but the profit per ton of steel is still high in the industry

Sangang Minguang (002110) semi-annual report comment: high costs compress the gross profit space but the profit per ton of steel is still high in the industry

Interim report overview.

From January to June 2019, the company realized operating income of 189.

20 ppm, a ten-year increase of 7.

53%; operating profit was 28.

38 ‰, a decrease of 33 per year.

85%; net profit attributable to owners of the parent company is 21.

73 trillion, down 32 a year.

81%, corresponding EPS is 0.

89 yuan.

By quarter, the net profit attributable to owners of the parent company in the second quarter was 12.

11 ppm, year-on-year and month-on-month changes were -32.

64% / 25.

93%.

The cost pressure is increasing, and the company’s revenue will not increase.

The reported quantity, company iron, steel, and volume are 511 武汉夜网论坛 respectively.

26/432.

68/508.

35 changes each year are 20 each year.

0% /-12.

3% / 3.

1%.

From the perspective of ton steel indicators, the company’s ton steel in the first half of the year was about 4,238 yuan / ton, a continuous increase of 756 yuan / ton, but the cost of ton steel increased by 857 yuan / ton, the gross profit per ton of steel was 831 yuan / ton, down 101 yuan / tonTon.

Driven by the rise in volume and price, the company’s operating income has increased, but the excessive growth of raw material costs, especially iron ore prices, in the first half of the year has compressed the gross profit space of products, and the corresponding net profit has slightly replaced, but from the perspective of the product’s ton steel profitability,Is still in a high position in the industry.

Internal and 武汉夜网论坛 external training, production and operation and capital operation are “double wheel” driven.

Since 2016, Sangang Group has gradually promoted the overall listing of the main iron and steel industry. Currently, only Luoyuan Minguang has not yet injected into the company’s platform.

According to the group’s commitment, when the conditions are mature, it can be merged into a listed company, and the company’s steel production capacity will increase by nearly 20% to 1155.

In addition, the company used its own funds to purchase iron 104 additive and steel 100 additive production capacity indicators, the production scale continued to grow, and the industrial layout was gradually improved.

There is still a shortfall in supply and supply in the province.

After the expansion of production capacity in Fujian Province, the overall increase of steel was about 668.

5 name, but mainly high-end products.

Considering that the incremental production capacity needs to be gradually released year by year, we estimate that the steel output in Fujian Province in 2019-2021 will be 3300/3600/3800 indicators, respectively, while increasing 384/300/200 indicators.

On the demand side, considering the high-speed investment demand in Fujian Province, we estimate that the steel demand in Fujian Province in 2019-2021 will be 3663/3753/3810 respectively according to the fixed asset investment steel consumption coefficient method.2.

At 8%, the supply gaps formed were 363/153/10 endpoints.

Investment Advice.

Regarding the impact of Luoyuan Minguang injection and outsourced production capacity for the time being, it is estimated that the total operating income for 2019-2021 will be 359.

7/345.

5/357.

8 ppm, a ten-year increase of -0.8% /-4.

0% / 3.

6%; net profit attributable to owners of the parent company is 45.

4/48.

2/54.

2 trillion, corresponding to EPS 1.

85/1.

97/2.

21 yuan, the corresponding PE is 4.

4/4.

1/3.

7 times.

As a leading regional company, it can enjoy the relative prosperity of supply and demand fundamentals within the region; the conversion of ton steel profits has an excess return compared to the industry; and the company’s undistributed profits are still in a leading position.The company can still maintain a relatively high level of dividends in the future and maintain the company’s “overweight” investment rating.

Risk reminders: environmental protection and limited production, lower production capacity than expected risk; risk of higher-than-expected demand; Luoyuan Minguang injected uncertainty risk.