Valin Steel (000932): Production and Sales Profits Hit a New High
Investment Highlights: Event: The company released its 2018 results announcement, reporting that the two companies achieved operating income of 911.
79 ppm, an increase of 19 years.
09%; realized net profit attributable to shareholders of listed companies 67.
80 ppm, a 64-year increase of 64.
53%; basic EPS is 2.
25 yuan, an annual increase of 64.
23%, corresponding to four quarters EPS is 0.
51 yuan, 0.
63 yuan, 0南京夜网论坛.
67 yuan and 0.
In addition, the company intends to take 30.
Based on 1.6 billion shares, capitalization of capital reserves will be used to increase the share capital, and all shareholders will be increased by 4 shares for every 10 shares.
The rise in production and sales drove the company’s ten-year performance to the best in history.
According to the report’s baseline, the company produced 1631 iron, 1972 length of steel, and 1836 length of steel, increasing by 10%, 14%, and 10% respectively, setting a new annual output record.
Initial sales of steel 1849 initially increased by 12% per year, and the increase in sales prices was higher than the industry average3.
In terms of specific varieties, the gross margins of the main long products, plates and steel pipes reached 18 respectively.
61%, of which sheet revenue accounted for more than 52%, is an important driving force for the company’s performance.
Operating income and net profit attributable to mothers have maintained rapid growth for three consecutive years, setting a new historical high for the second consecutive year.
Affected by the substantial impact of steel prices in the fourth quarter, the fourth quarter earnings decreased month-on-month.
Due to the expected fall in production during the heating season, steel production remains high, and the prices of rebar and hot rolled steel from October to November also fell.
The company’s gross profit per ton of steel in 2018Q1-Q4 was 760 yuan / ton, 881 yuan / ton, 1003 yuan / ton, and 734 yuan / ton.
The work of reducing leverage has been progressing steadily, and the structure of assets and liabilities has been significantly optimized.
In the total reported, the company’s asset credit ratio dropped to 65.
12%, a decrease of 15.
42 single, anti-risk capabilities have been significantly improved. By the end of the year, the company ‘s short-term debt reduction has decreased by 47%, and the long-term and short-term debt ratio has been optimized to 38%: 62%.The company increased its capital by 32.
There is no debt of 800 million US dollars, resulting in an average asset-liability ratio of the three subsidiaries of more than 5%, while reducing financial costs each year.
Overall, although the company’s asset structure has been significantly optimized, it is still higher than the SW steel industry over the same period53.
The average level of 18 is expected to continue to increase through the company’s future earnings, and the debt ratio still has room to fall.
Iron and steel assets will be listed on the whole, which is expected to significantly increase the net profit attributable to mothers in 19 years and solve related-party transactions.
On December 8, the company issued an announcement, intending to start with 6.
At a price of 41 yuan / share, a total of about 13 shares were issued to Hualing Group, Liangang Group, Henggang Group and six investors.
6.2 billion shares at a consideration of 87.
2.8 billion shares to acquire all the shares of “Sangang” (Hualing Xianggang 13).68%, Valin Liangang 44.
17%, Valin Steel Pipe 43.
In addition, the company intends to use cash considerations17.
74 billion acquisition of 100% equity interest in Hualing Energy from its Liangang Group.
Through this acquisition, “Sangang” will become a wholly-owned subsidiary of the company, Yangchun New Steel will also become a holding subsidiary, and Valin Steel will achieve the overall listing of steel assets.
Based on the financial caliber of 2017, if the reorganization is carried out in 19 years and the reorganization is approved, it will increase the company’s net profit attributable to the parent by more than 20% (reduced “Sangang” minority shareholders’ profit and loss 11).
0.2 million yuan + Hualing energy saving net profit 1.
31 ppm + Yangchun New Steel’s 51% net profit6.
$ 0.5 billion + reduced financial costs1.
In essence, the company and the group have always had a large number of connected transactions in the purchase of raw materials and steel sales. In 2018, the amount of connected transactions accounted for 22% of operating income.
91%, and after the reorganization is completed, the company will maintain its business independence, which can more effectively resolve the competition with the Hualing Group and potential risks of connected transactions, which is beneficial to the protection of shareholders’ rights and interests.
Cash flow increased significantly.
The company’s net cash flow from operating activities increased by 228 each year.
58%, mainly due to rising steel prices and increased sales, the increase in cash inflows from operating activities was greater than the increase in cash from operating activities.
The future outlook opens the stage of cash dividend return to investors.
In 2018, because the company’s undistributed profits were significantly negative and affected by falling leverage and environmental protection capital expenditures, the company implemented the existing distribution, but planned to transfer 4 shares to every 10 shares for all shareholders.
However, the company plans to gradually distribute cash in principle in 2019-2021 in excess of 30% of the annual distribution profits realized in the last three years; the cash dividend consolidation does not exceed the company’s net profit attributable to shareholders of the parent company in that year20%.
As the overall profit center of the steel industry will move upwards in 2019, the increase in profits will promote the company’s probability of undistributed profits to be positive, and future cash dividends can be expected.
Profit forecast and investment rating: The company is expected to achieve operating income of 880 from 2019 to 2021.
61 and 875.
8 billion; net profit attributable to mothers is 53.
34 and 57.
110,000 yuan, EPS is 1.
84 and 1.
89 yuan, corresponding to PE respectively 4.
5X and 4.
3 times, maintaining “strongly recommended” level.
Risk reminders: 1. Environmental protection and limited production are less than expected; 2. Downstream demand is less than expected.