Baosteel (600019): Cost reduction improves margin of safety

Baosteel (600019): Cost reduction improves margin of safety

Performance summary: The company released the semi-annual report for 2019, reporting that the combined company realized operating income of 1,408.

7.6 billion, downgraded five years ago.

16%; realized net profit attributable to shareholders of listed companies 61.

87 trillion, down 38 a year.

19%, equivalent to 0 EPS.

28 yuan, single quarter EPS is 0.

12 yuan, 0.

RMB 16; net profit attributable to shareholders of the listed company after deduction of 62.

48 ppm, down 33 years ago.

84%; Tons of steel data: The company’s iron, steel and volume in the first half of the year were 2282 respectively.

7 Initial, 2428.

6 initial, 2338 initial, sales of commercial blanks 2335.

2 Initially, each year increases by 0.

26%, 1.

38%, 0.

95% and 0.


Combined with the semi-annual report data, it is estimated that the ton steel content in the first 四川耍耍网 half of 2019 is 4,239 yuan, the cost per ton steel is 3749 yuan, and the gross profit per ton steel is 489 yuan, while falling by 303 yuan, 3 yuan, and 300 yuan respectively; Financial analysis: the company’s comprehensive gross profit margin in the first half of 201911.

05%, down 3 a year.

93%, of which the changes in gross profit of cold-rolled carbon steel coils, hot-rolled carbon steel coils, steel tubes and long products were -4.

9%, -9.

1%, 0.

5% and -3.

7%, although the demand for the automotive industry has weakened since the beginning, the change in the gross profit margin of cold rolling is smaller than that of hot rolling, which is mainly due to the replacement of research and development costs of cold rolling from costs to expenses in the first half of the year;

27%, a decline of 0 per year.

13%, the cost per ton of steel during the temporary reduction of 30 yuan to 378 yuan, mainly due to the extension of financial costs to 43.

5%, which can be caused by the scale expansion and decline of 231 in the first half of the year.

The budget expenditure of 7% 20% is reduced by 4 million USD, and the loss from exchange rate loss caused by RMB depreciation is increased by 600 million USD; net profit margin is 4.

75% twice a year 2.

59%, the net profit per ton of steel replaced 182 yuan to 287 yuan; increase the average return on net assets 3.

48% twice a year.

49 assets; asset-liability ratio 45.

81%, downgraded 4 in ten years.


In addition, the three major bases of Wuhan Qingshan, Zhanjiang Dongshan and Nanjing Meishan achieved net profit in the first half of 20195.

7 trillion, 10 trillion and 2.

9 ‰, 33 years ago.

7%, 55.2% and 81.

4%; cost reductions improve safety margin: the company’s first half of the net profit decreased by at least 43%.

51%, mainly due to the decline in the overall economic prosperity of the industry, especially the company’s product structure is mainly sheet metal, the use of downstream cars dragged down by profit or the relative extent of relative deviation.

Although the prices of bulk raw materials such as iron ore have risen, the actual company’s ton steel cost has continued to fall by at least 3 yuan, mainly due to the company’s significant reduction in cost, effectively hedging the impact of the sluggish automobile and rising mineral prices, and the company realized costs in the first half of 2019Cut 31.

5 trillion, exceeding the annual target of 20 trillion, mainly focused on manufacturing cost reduction26.

8.7 billion.

The company has carried out cost reduction for four consecutive years and cut two rounds of cost reduction plans at the same time, which is conducive to improving its own safety margin and enhancing its ability to resist the cycle during the cycle change. The Zhanjiang No. 3 blast furnace has steadily advanced: at the end of March 2019, Zhanjiang Iron and Steel No.The blast furnace system project is fully underway and is scheduled to start production in 2021.

After the project is completed, Zhanjiang Iron and Steel will form an annual output of hot metal 1225, molten steel 1252.

8 initial, 1081 initial capacity scale of steel.

In the first half of the year, the hot rolling, cold rolling and sintering projects have all begun, and it is expected that the follow-up will continue to be completed in order.

In addition, with regard to environmental protection in capital expenditure, it is expected that Meishan and Dongshan will meet the bottom-up emissions requirements in 2020, and the Baoshan and Qingshan bases will meet the standards in 2022. Investment suggestions: Although the industry’s profit will gradually return to normal in 2019, the company’s main downstream automotive market is sluggish,As the leader of domestic steel enterprises, Baosteel has achieved industry average levels of profitability. At the same time, the company has continued to reduce costs and increase efficiency, and its products have been continuously upgraded and optimized. The profit potential has continued to widen, and it is currently estimated that it has fully reflected modern pessimistic expectations.

We estimate that the company EPS for 2019-2021 will be 0.

53 yuan, 0.

65 yuan and 0.

73 yuan, maintain “overweight” rating; risk warning: macroeconomic growth trends cause demand pressure; supply-side pressure continues to increase.