3. Wuhan Iron and Steel Co., Ltd. (600005)
In the first quarter of 2007, the company achieved total operating income of 12.41 billion yuan and operating profit of 2.107 billion yuan, an increase of 49.62% and 49.62% respectively over the same period last year. 592.82%, achieving a net profit of 1.412 billion yuan, a year-on-year increase of 471.71%. The return on net assets was 6.03%, a year-on-year increase of 4.83 percentage points, and the operating cash flow per share was 0.23 yuan/share. Achieved earnings per share of 0.18 yuan, an increase of 462.5% compared with the same period last year. The company's gross profit margin in the first quarter was 21.29%, an increase of 16.03 percentage points over the same period in 2006.
(1) Industry status: The company is the third largest steel company in China. Its steel products include cold-rolled and coated materials, cold-rolled silicon steel, hot-rolled materials, large steel products, wire rod products, plate products, There are 7 major categories of bar products and more than 500 varieties, with an annual steel production of 10 million tons. It is one of the main plate production bases in my country. It is also the supplier of hot-rolled coils with the most complete product varieties and the largest output in China. It has the most domestic product varieties. As a dedicated medium-thick plate production plant, the company will exclusively produce a full range of passenger car plates in China. After the second cold rolling operation is put into operation, the company will have the ability to produce high-end cold plates and high-end car plates, and will strive to become a major manufacturer of automotive plates in my country. production base and the world's most competitive cold-rolled silicon steel sheet production base.
(2) Leading manufacturer of cold-rolled silicon steel sheets: The largest and most comprehensive manufacturer of cold-rolled silicon steel products in China, and remains the leader in cold-rolled oriented silicon steel sheets and high-grade cold-rolled non-oriented silicon steel sheets. It has the exclusive production status in China and now has the production capacity of 120,000 tons of oriented silicon steel and 960,000 tons of non-oriented silicon steel. In 2007, the silicon steel products are planned to reach 1.14 million tons (270,000 tons of oriented silicon steel, including 20,000 tons of HIB steel). In 2006, silicon steel products achieved main business income of 8.672 billion yuan, with a main business profit rate of 44.06%. The company's annual silicon steel production capacity has reached 1.42 million tons. After the completion of the three-silicon steel, it will end the passive situation of my country's oriented silicon steel mainly relying on imports.
(3) Technical advantages: The company has 25 product quality reaching the international advanced level, 8 products reaching the domestic leading level, and 3 products reaching the domestic advanced level; it has applied for 27 patents, obtained 23 patent authorizations, and participated in Formulate 12 national standards and industry standards. The company successfully developed a series of low-alloy high-strength steels for GDS and signed a long-term supply contract with an American company, breaking Wuhan Iron and Steel's record of zero exports of this product and filling the domestic gap.
(4) Development of iron ore in western Hubei: Wuhan Iron and Steel will accelerate the development of iron ore resources in western Hubei and create a new industrial chain. The iron ore belt that has been proven covers an area of ??18,000 square kilometers and has reserves of nearly 2 billion tons. The amount of iron ore can be used by Wuhan Iron and Steel for 10 years.
Wuhan Iron and Steel Group plans to spend 7 billion yuan to give priority to approximately 1.4 billion tons of iron ore resources in Enshi. From 2007 to 2009, 1.3 million tons of raw ore will be developed in the first phase, 10 million tons of raw ore will be developed in the second phase after 2009, and 25 million tons of raw ore will be developed in the third phase. This will rewrite the history of Wuhan Iron and Steel's dependence on imports for 80% of its ores.
(5) Development goals: By the end of 2010, the production capacity of 15 million tons of steel will be formed, and the labor productivity will reach more than 1,000 tons of steel/person-year; the adjustment of process structure and variety structure will be accelerated, and the proportion of deep processing of products will be large. With the plate-to-strip ratio reaching over 86%, we strive to build the company into an important plate production base in my country, mainly for automobile plates and cold-rolled silicon steel sheets, and to enter the ranks of world-class enterprises. Wuhan Iron and Steel's automotive steel production reached 1 million tons in 2006. In 2007, it will basically form an annual production capacity of 1.8 to 2 million tons, with a market share of about 7%.
(6) Performance forecast: We predict that the company's earnings per share in 2007 will be 0.71 yuan, and the current price-to-earnings ratio is only 15.08 times, lower than the industry average. Because the company has unique technical advantages and good future growth, we believe that the company's reasonable price-to-earnings ratio should be 18-20 times, and a 30% blue-chip premium is given. The company's reasonable valuation is 16.6-18.5 yuan. We give "Recommended" investment rating.