Shaogang Songshan (000717): Good location advantage or benefit from the Greater Bay Area in the future
The company’s geographical advantage is obvious. For the first time, the company is classified as a steel company affiliated with Baowu of China. The main advantages are threefold. First, the company is located in Guangdong. The total GDP of Guangdong exceeds its national crude steel production ratio.Inflowing into provinces, steel is more expensive than the northern region, and it is near the port and the sea, which reduces the transportation cost of raw materials compared to inland steel companies. Second, the company plans to transfer 50% of the equity of Baote Shaoguan to optimize the business structure under the concurrent operation of Pute;Third, the company’s per capita steel output performance is eye-catching, and internal control has improved initially, and it will continue to reduce this space in the future.Taking into account the relaxation of environmental protection and production restrictions in 2019, the weakening of downstream demand, and the steel industry may face downward pressure, we expect the company’s EPS in 2019-2021 to be 0.77, 0.79, 0.85 yuan, the corresponding PE is 4 respectively.88, 4.78, 4.45. The first coverage was given an “overweight” rating. At the end of 2019, the undistributed profit or normalization, the company has a dividend condition, the company’s operating income in 2018, the average net profit attributable to shareholders of the parent company hit a record high, and it went up by 7 alternately.95%, 28.20%.Since 2015, benefiting from the supply-side reform of the steel industry and the improvement in demand, the company’s profits have improved significantly, overlapping internal costs have been reduced and efficiency has increased, costs have fallen, and the asset-liability ratio has improved year by year. In the first quarter of 2019, it has exceeded the industry average.Affected by previous errors, the company has not paid dividends since 2008; until the profit improves, the undistributed profit at the end of 2018 is close to normalization, and the company may have dividend conditions in 2019. Guangdong is a province with a net inflow of steel. In the future, the Bay Area infrastructure may be the largest province in the national economy. For many years, the economic growth rate 北京spa会所 is higher than the country, and the investment growth rate is not weaker than the country. However, the proportion of crude steel production is lower than the GDP ratio.There are no major steel-producing provinces in the surrounding area. For many years, the province has been a net inflow of steel, and steel prices are higher than those in northern regions.The strategic layout of the Guangdong-Hong Kong-Macao Greater Bay Area is high. The release of the February 2019 Outline indicates that the construction of the Greater Bay Area has entered a substantive planning and layout stage. The construction of related infrastructure in the future may drive demand for steel. Infrastructure supplements the shortcomings. In the third quarter of 2019, manufacturing investment growth or a short-term rebound in real estate. In July, the 南京桑拿网 content of the Political Bureau of the Central Committee repeated non-standards. Trust financing channels were tightened. The pressure on the late start of construction was obvious.In the context of low interest rates and low inventory levels, it is not pessimistic to look at the real estate investment construction project investment sub-item in the long term; in terms of infrastructure, the 19H1 special debt issuance is faster, and the release of new special debt regulations in June solves some project capital issues, overlapping 18H2 low base,In 19H2, the growth rate of infrastructure investment may be expected to increase moderately. In terms of manufacturing industry, according to the trend of industrial land transaction data of leading indicators, the growth rate of manufacturing investment in 19Q3 may rebound briefly. The company has room to reduce fees, but the industry is down. It is given an “overweight” rating. Weak downstream demand in 2019, and the July Political Bureau meeting showed that 19H2 real estate management is tightening, and the steel industry is facing downward pressure. The company’s location advantage is obvious, andInternal remaining fee reduction space, profit fluctuations may be less than the industry.Based on the closing price on August 15, 2019, the industry’s comparable companies PB (2019E) averaged 1.17, the company PB (LF) is 1.39. Give company PB (2019E) an assessment 1.2-1.3 times, the company BPS (2019E) is 3.33 yuan, target price 3.99-4.32 yuan, the first coverage is given an “overweight” rating. Risk warning: macroeconomic expectations and policy adjustments; raw material prices are rising; downstream demand is sluggish.