xinsteel(600782) 国盛证券·2024-10-25 05:12Investment Rating - The report gives a "Buy" rating for the company, New Steel Co., Ltd. (600782.SH) [1][3]. Core Views - New Steel Co., Ltd. is positioned as a regional leader in plate steel, with strong historical profitability and cost control capabilities. The company is expected to see profit improvements due to product structure optimization and a rebound in the industry cycle. The current market valuation is significantly undervalued compared to its replacement cost, indicating strong strategic investment value [1]. Summary by Sections Company Overview and Product Structure - New Steel Co., Ltd. has a production capacity of 10 million tons of crude steel annually, with plate production capacity reaching 7 million tons per year. The company has successfully developed high-end products for various applications, including oil and gas equipment, aerospace, and automotive sectors [17][19]. Cost Control and Profitability - The company maintains low costs compared to industry peers, with significant room for cost reduction through collaboration with Baowu Steel Group. The company ranks high in terms of depreciation costs per ton of steel and profitability metrics [1][11]. Valuation and Market Position - The company's valuation is currently at 0.49 times its fixed asset value, significantly below its historical average of 0.89 times. This suggests potential for valuation recovery as industry conditions improve. The company is also enhancing its product mix towards high-end products, which is expected to further improve long-term profitability [1][3]. Financial Projections - The projected net profits for New Steel Co., Ltd. from 2024 to 2026 are estimated at 90 million, 540 million, and 940 million yuan respectively. The report anticipates a significant recovery in profitability following a period of short-term downturn [1][2]. Revenue and Growth Trends - The company reported a revenue of 71.14 billion yuan in 2023, with a year-on-year decline of 28.1%. However, the long-term growth trend shows a compound annual growth rate of 13.8% from 2015 to 2023 [2][23]. Product Sales and Market Demand - In 2023, the company produced 10.86 million tons of steel, marking a 4.66% increase year-on-year. The product structure is heavily weighted towards plate steel, which constitutes approximately 67% of total production [19][21]. Financial Ratios - The report highlights key financial ratios, including a P/E ratio of 22.3 in 2023 and a P/B ratio of 0.4, indicating a low valuation relative to book value [2][9]. Investment Recommendation - Given the company's strong market position, ongoing improvements in management efficiency, and potential for profit recovery, the report recommends a "Buy" rating for investors looking for strategic opportunities in the steel sector [1][3].