Fangda Special Steel (600507) Quarterly Report Comment: Third-quarter results gradually become apparent due to rising costs and blast furnace accident

Fangda Special Steel (600507) Quarterly Report Comment: Third-quarter results gradually become apparent due to rising costs and blast furnace accident

On the evening of October 29, the company announced the third quarter report of 2019.

At the core of the report, the company achieved profit attributable to its mother12.

7.7 billion, previously 44 per second.

82%; realized basic profit income of 0.

88 yuan / share, 46 from the previous decade.

99%.

The company achieved net profit attributable to its mother in the third quarter2.

2.2 billion, down 62 from the second quarter.

05%.

Increasing cost + Rebar sales price decline The company’s third-quarter performance improved significantly. The company’s main products are rebar, automotive leaf springs, flat spring springs, iron powder, etc., where rebar revenue accounts for more than 50%.

Since the third quarter of this year, iron ore prices have remained high.

According to Steel Federation data, the spot price of 62% Australian fines in the third quarter was 101.

33 US dollars / dry ton, an increase of 1 from the second quarter.

5%.

Under the situation of rising cost pressure, the company’s main product rebar price is still on the rise in the third quarter: with rebar HRB400: 20mm, according to the data from Steel Union, the average price in the third quarter of Nanchang was 3969 yuan / ton, A month-on-month decrease of 95 yuan / ton, a decrease of 2.

3%.

Increasing raw material costs and changes in sales prices of finished materials are the essence of the company’s third quarter performance. The transformation, due to the company’s No. 2 blast furnace on May 29, caused a gas pipeline deflagration accident affecting the company’s third quarter molten iron production.

According to the company announcement, the company achieved net profit attributable to its mother in the third quarter.

2.2 billion, the lowest in a single quarter since 2017.

In the fourth quarter, iron ore prices may fluctuate within a narrow range. The company is expected to gradually stabilize. The company is a large private steel company in Jiangxi Province. The company’s operating mechanism 杭州夜网论坛 is flexible and its net profit per ton of steel has been leading the industry.

Since July, iron ore prices have gradually entered a downward cycle. We believe that the company’s iron ore costs in the fourth quarter may change around the price center of US $ 90 / dry ton, which is lower than the third quarter.

And this year’s long-term scrap price changes of 2300 yuan / ton-2500 yuan / ton price changes, or will play a certain role in supporting the spot price of steel.

In addition, we are particularly concerned about the impact of the later blast furnace resumption on the company’s performance. We believe that the company’s fourth-quarter performance is expected to gradually stabilize.

The investment proposal takes into account the impact of the company’s No. 2 blast furnace accident, the continued high level of iron ore prices and the trend of ordinary steel prices may affect the company’s annual performance. We will change the company’s EPS from 2019 to 2021.

56 yuan / share, 1.

66 yuan / share, 1.

72 yuan / share adjusted to 1.

09 yuan / share, 1.

17 yuan / share, 1.

29 yuan / share, maintain “Buy” rating.

Risk warning: the price of raw materials fluctuates sharply, the second blast furnace resumes production, and other changes occur in the company’s operations.