Hangzhou Iron & Steel Co., Ltd. (600126) First Coverage Report: Steel Business Stable Trade Business or Ushering in Expansion
This report reads: The company is a large-scale steel company in the Yangtze River Delta region, and its steel sector business is stable.
The company intends to acquire the trading assets of the parent company. If the acquisition is completed, the company’s trade sector will usher in a new stage of development. The main points of investment: first coverage, given an “overweight” rating.
The company is a large steel company in the Yangtze River Delta region. We expect the company’s EPS to be 0 in 2019-2021.
48 yuan, with reference to the same type of steel companies, the company will be given PE 14X in 2019, corresponding to a target price of 5.
24 yuan, the first 杭州夜生活网 coverage, giving the company an “overweight” rating.
Real estate investment is stable, and car sales are not pessimistic.
The business cycle of this round of real estate demand has lasted for three and a half years from the end of 2015 to the present. There is still no significant decline. We believe that this core comes from low inventory and tight financing environment for real estate developers. We believe that real estate investment in the third quarterStability and infrastructure will contribute an increase due to improved funding sources.
The implementation of car sales exceeding the Sixth National Standard will gradually pick up. At present, car sales are overly pessimistic.
In addition, the sales of excavators and home appliances maintained a high growth rate. Active oil and gas investment will also support downstream demand for sheet metal, and the overall demand for sheet metal is stable.
The company is adjacent to the port, and the cost advantage of raw fuel transportation is obvious.
Ningbo Steel is geographically adjacent to the Ningbo Port. The bulk of the raw materials such as iron ore, coal and coke purchased by the company are homogenized and discharged directly to the company’s yard through the Beilun Port process, without the need for reverse transportation.
In 2018, the company’s cost per ton of ore was relatively reduced by 60 yuan, which is equivalent to the cost of a ton of molten iron, and the cost of hot coils was reduced by 100 yuan / ton.
The company intends to acquire the group’s subsidiary trading assets to further expand the company’s trade sector.
The company announced in 2019 that it intends to acquire metallurgical materials affiliated to Hangzhou Iron and Steel Group, Hangzhou Steel International Trade (99.
5% equity), Dongling Trading and Fuchun Company’s trading assets.
If the acquisition is completed, the affiliated trading assets of Hangzhou Iron and Steel Group will be listed as a whole, and the synergy between the company and the trading sector may increase, and the company’s competitiveness will increase.
Risk reminders: Real estate investment has fallen sharply; car sales have continued to decline; the company’s acquisition progress has fallen short of 夜来香体验网 expectations.