HONGLU(002541) 国联证券·2024-10-25 11:00Investment Rating - The report assigns a "Buy" rating to Honglu Steel Structure (002541) for the first time [5] Core Views - Honglu Steel Structure is a leading player in the steel structure manufacturing industry, with a strong cost advantage and deep ties to core customers, leading to sustained growth in new orders [3] - The company has accelerated its intelligent transformation since 2022, focusing on upgrading cutting and welding processes, which has temporarily reduced production and increased depreciation/R&D expenses but is expected to enhance its competitive edge in the long term [3] - The steel structure industry faces short-term demand pressure due to industrial production and local fiscal challenges, but the long-term growth prospects for prefabricated buildings remain strong [3][9] Company Overview - Honglu Steel Structure is the largest steel structure manufacturer in China, with a leading production capacity and significant scale advantages [7] - The company has gone through three development phases: rapid expansion of engineering business (2002-2014), refocus on manufacturing (2015-2021), and intelligent transformation (2022-present) [7] - In 2023, the company's steel structure production reached 4.49 million tons, ranking first in the industry [7] Industry Dynamics - The penetration rate of prefabricated buildings in China increased from 4.9% in 2016 to 26.5% in 2022, with steel structure production growing at a CAGR of 12% from 2014 to 2023 [7] - The steel structure industry is highly fragmented, with the top 5 companies accounting for 8.2% of the market share in 2023, up from 4.9% in 2015 [7] - Honglu Steel Structure's market share increased from 3% in 2015 to 4% in 2023, reflecting its leading position in the industry [7] Competitive Advantages - The company's large-scale production capacity and strong bargaining power with suppliers allow it to purchase steel at lower prices than competitors [7] - Honglu Steel Structure has implemented a flat and refined management model, reducing per-ton expenses and depreciation costs [7] - The company's intelligent transformation, particularly in cutting and welding processes, is expected to further strengthen its cost advantages [7] Financial Projections - The report forecasts that the company's revenue will reach 22.8 billion, 25.2 billion, and 27.9 billion yuan in 2024, 2025, and 2026, respectively, with year-on-year growth rates of -3%, +10%, and +11% [7] - Net profit attributable to shareholders is expected to be 1.0 billion, 1.1 billion, and 1.3 billion yuan for the same periods, with year-on-year growth rates of -14%, +12%, and +11% [7] - The company's EPS is projected to be 1.48, 1.65, and 1.82 yuan for 2024, 2025, and 2026, respectively, with a 3-year CAGR of +2% [7] Valuation and Target Price - The report values the company at 10 times the 2025 PE, with a target price of 16.48 yuan [11] - The current price of 14.13 yuan implies a 2025 PE of 8.6 times, indicating undervaluation [5][11]