HONGLU(002541) 国盛证券·2024-11-12 06:23Investment Rating - The report maintains a Buy rating for Honglu Steel Structure (002541 SZ) [6] Core Views - Honglu Steel Structure is the leading domestic steel structure manufacturer with a strong competitive advantage in cost efficiency, production scale, and customer stickiness [1] - The company's annual production capacity has reached 6 million tons, with a capacity utilization rate of 90% and a production-sales ratio of 95% in 2023 [1] - The domestic steel structure market has significant growth potential, with the industry expected to grow at a CAGR of over 9% from 2023 to 2025 [2] - The company is expanding its overseas business, with successful deliveries in Thailand, Indonesia, and Mexico, and is expected to benefit from higher-margin overseas orders [2] - The company is accelerating its intelligent transformation, focusing on cutting, welding, and spraying processes, which is expected to significantly improve cost efficiency and profitability [3] Industry Overview - The domestic steel structure market is highly fragmented, with the top 5 listed companies accounting for only 7% of the market share in 2023, and Honglu Steel Structure holding a 3 8% market share [2] - The steel structure industry is expected to grow steadily, with the usage of steel structures projected to reach 1 4 billion tons by 2025, accounting for 15% of crude steel production [2] - The industry is undergoing a transformation, with small and medium-sized enterprises being phased out due to stricter policies and price fluctuations, while leading companies like Honglu Steel Structure are strengthening their market position [39] Company Operations - The company has 10 major production bases across China, strategically located to enhance order response speed and large-scale project collaboration [18] - Honglu Steel Structure has a strong cost advantage due to its large-scale procurement, intelligent production, and refined management capabilities, with steel procurement costs 10%-13% lower than industry peers [21] - The company has established long-term strategic partnerships with major state-owned enterprises and industry leaders, such as China State Construction, China Metallurgical Group, and SMIC, ensuring stable and large-scale orders [32] Intelligent Transformation - The company is focusing on intelligent transformation in three core areas: cutting, welding, and spraying, which is expected to significantly improve production efficiency and reduce costs [3] - By 2024, the company had equipped over 500 high-power laser cutting machines, improving cutting precision and efficiency, and increasing material utilization by 0 9% [3][56] - The company has made significant progress in welding robots, with the potential to increase gross margins by 0 9-1 8 percentage points depending on the replacement rate of welding robots [3] Overseas Expansion - The company is actively expanding its overseas business, with orders from Thailand, Indonesia, and Mexico already delivered in 2024 [2] - Overseas orders are expected to contribute significantly to the company's profitability, with higher margins compared to domestic orders [47] - The company's overseas business is mainly driven by domestic customers' overseas projects, which reduces market development costs and avoids risks associated with geopolitical and exchange rate fluctuations [47] Financial Performance - The company's revenue in 2023 was 23 539 billion yuan, with a year-on-year growth of 18 6%, and net profit attributable to shareholders was 1 179 billion yuan, a slight increase of 1 4% [5] - The company's R&D investment in 2023 was 700 million yuan, accounting for 2 97% of revenue, a significant increase of 52% year-on-year [51] - The company's EPS for 2024-2026 is forecasted to be 1 25, 1 40, and 1 56 yuan per share, respectively, with a current PE ratio of 13 4x for 2024 [4]