Baosteel Co., Ltd. (600019): Company profit steadily advances as industry declines

Baosteel Co., Ltd. (600019): Company profit steadily advances as industry declines

1.

The event company releases its 2019 half-year report.

The company achieved operating income of 1,408 in the first half of the year.

7.6 billion, down 5 every year.

16%; the net profit attributable to shareholders of listed companies is maximized 61.

87 trillion, down 38 a year.

19%; cash flow from operating activities 94.

37 trillion, down 51 a year.

53%; basic profit income is 0.

28 yuan / share.

2.

Our Analysis and Judgment (I) The “weak long-strength plate” and the automobile downturn are the reasons for the decline in the company ‘s profit. The company ‘s products are mainly sheet metal.43.

51%.

In terms of steel, domestic crude steel output was about 4 in the first half of the year.

9 billion tons, an increase of 9 in ten years.

9%; China Steel Association steel price index 109.

5, down 4 each year.

6%; Platts 62% iron ore index 91 during the same period.

$ 4, up about 30 a year.

9%.

The spread between the purchase and sale of steel products narrowed.

In addition, Q1 plate prices were sluggish, and steel prices fell month-on-month. Although the initial steel prices in Q2 suffered a slight increase due to the support of raw material prices and the country’s reduction of fees and taxes, the prices of steel released after 6 months fell.

In the auto market, Q2 global auto sales were 2311.

90,000, two years ago.

7%, and the domestic automobile production replaces 13 every year.

7%.

Even so, the company’s cold rolled carbon steel sheet has a gross profit margin of 10.

4%, a decrease of 4 over the same period last year.

9%, the gradient is smaller than the hot-rolled carbon steel coil (YOY-9.

1%).

We believe this is due to the company’s significant cost reduction effect.

The cost of the company in H1 2019 decreased by 31 compared with the same period in 2018.

5 trillion, exceeding the annual target of about 8.

700 million, effectively overcome complex indicators such as the continued downturn in the automotive market and the continuous increase in mineral prices, and also strengthen the company’s cyclical resistance.

(2) The Zhanjiang project is advancing steadily, and overseas projects are actively advancing the company’s Zhanjiang No. 3 blast furnace system construction.

The hot rolling project started on May 9, the cold rolling project started on June 11, and the sintering project started on June 17.

The project is planned to be put into production in 2021, and the supplementary capacity it provides will be very considerable, that is, the annual output of hot metal 1225 is called molten steel 1252.

8 additives, 1081 additives for steel.The Zhanjiang blast furnace production project is one of the company’s multi-manufacturing base projects. The smooth progress to completion means that the company can further improve the management capabilities of multi-manufacturing bases and explore synergies to maintain stable production capacity, control costs, and effectively hedge against changes in the internal and external operating environment.Potential risks.

In addition, the company is promoting the implementation of overseas 青岛夜网 full-process steel base projects, and has initially locked the target project group, and strives to achieve a breakthrough in the layout of overseas steel manufacturing bases within 3 years.

The internationalization of the company started early and was regarded as the only way for Baowu to develop.

At present, the domestic steel industry has entered a long period of de-capacity stage, and competition has gradually intensified. The smooth progress of overseas layout will help the company to continue to expand production capacity under the domestic supply side and environmental protection control.

3.

Investment suggestion The company is an industry leader, its profitability is higher than the industry average, and its effective cost control, product upgrade policy and steady advancement of multiple production bases will 杭州桑拿网 enhance the company’s cyclical resistance.

We expect the company’s EPS to be zero in 2019-2020.

54/0.

64 yuan, corresponding to PE for 2019-2020 is 10.

96x / 9.

25x with a “cautious recommendation” rating.

4.

Risk warnings 1) The demand for steel is less than expected; 2) The environmental protection control at each base is less than expected.