Shandong Iron and Steel (600022) 2019 Third Quarterly Report Review: Looking forward to Rizhao boutique steel base to support long-term profit

Shandong Iron and Steel (600022) 2019 Third Quarterly Report Review: Looking forward to Rizhao boutique steel base to support long-term profit

Shandong Iron and Steel released the third quarter report for 2019, and net profit attributable to mothers decreased by 80% year-on-year.

The company’s operating income from January to September 2019 was 53 billion yuan, an increase of 31% year-on-year, mainly due to the commissioning of the Rizhao base, the expansion of production and sales scale; and net profit attributable to mothers4.

9 ‰, a year-on-year decrease of 80%, mainly due to the increase in steel profits; gross profit margin 6.

76%, a decline of 5 per year.

3 points, a breakthrough in profitability.

The production of Rizhao base supports the growth of steel sales by 34% each year, but the profit per ton of steel has significantly changed.

The company’s January-September 2019 steel sales volume was 913 tons, an increase of 34% year-on-year; the ton steel revenue was 5801 yuan / ton, a continuous decline of 3%; the gross profit per ton steel was 392 yuan / ton, a decrease of more than 45%; the net profit per ton steel was 81 yuanTons, a decline of 79% per year.

Since 2019, the overall prosperity of the steel industry has declined, and the cost of iron ore and other materials has soared. Although the company’s steel production scale has increased, the profit level per ton of steel has plummeted.

The increase in taxes and fees, high costs, and high profits and losses of minority shareholders affect the net profit attributed to the mother.

On January 9, 2019, the company’s ton steel period cost was 263 yuan, an increase of 15% year-on-year; of which, the ton steel research and development expense was 135 yuan, a continuous increase of 105 yuan, and the company allowed to increase potential space in terms of cost reduction and efficiency improvement; the revenue was 27% per monthIncrease by 15.

6 points; minority shareholders’ profit and loss 2.

5.3 billion, a year-on-year increase of 35%, making the net profit of motherhood low.

The company holds 51% of the shares in Rizhao Boutique Steel Base.

2019Q3 single quarter net profit -0.

8.8 billion, Laiwu base is possible, Rizhao base is profitable.

The company’s single quarter operating income in 2019Q3 was 206.

25 ppm, an increase of 31 in ten years.

6%, an increase of 11.

4%, mainly due to the gradual commissioning of the Rizhao base; the company’s net profit attributable to its mother in a single quarter was -0.

8.8 billion, of which the parent company (mainly Laiwu base) has a net profit of -1.

US $ 9.8 billion, indicating that the Laiwu base was terminated due to high costs and 淡水桑拿网 other reasons; minority shareholders’ profit and loss was zero.

9.3 billion, indicating that the company holds 51% of Rizhao boutique steel base profitable.

The Rizhao boutique steel base supports long-term profitability and maintains the “overweight” rating.

The company’s Q3 profit forecast, we expect the prosperity of the steel industry to decline, so lower the company’s estimated EPS for 2019-2021 is 0.

07 yuan, 0.

07 yuan, 0.

08 yuan.

The company’s Rizhao base will continue to release output and earnings flexibility. The company is also expected to gradually acquire minority shares in Rizhao base to increase net profit attributable to its mother. We expect the company to maintain long-term profitability and growth potential and maintain an “overweight” rating.

Risk warnings: Rizhao base is put into operation less than expected; steel prices fluctuate; production safety risks of the company.