Jiuli Special Material (002318): Stainless Steel Faucet with High Yield
The recovery of oil and gas supports a new record: the company is a domestic leader in stainless steel pipes, and is the key supplier of the first two domestic oil companies. At the same time, it also has the supply qualifications of global lead oil companies.
Benefiting from the recovery of oil and gas investment in recent years and the acceleration of domestic unconventional oil and gas resources development, the company’s second-quarter performance in 2019 reached a record high, while the company’s scale and earnings are still in the bottom of history, which reflects the market’s low risk appetite and long-termWe believe that there is room for repair.
High dividend yield and excellent cash flow: If the 50% performance growth rate and dividend ratio in 2019 are unchanged (average 88 in 2017 and 2018).
7%) budget, the current sustainable corresponding annual distribution rate of 2019 annual report is as high as about 6%, this level is highly attractive for value funds.
In terms of cash flow, the company’s net operating cash flow average value is greater than net profit within ten years. After the supply and demand have been extended, the industry’s bargaining power has increased and the ability to repay in recent years has been enhanced. As a manufacturing company, it depreciates each year to create cash flow.Should be higher than net profit.
The company’s performance is worry-free in the medium term: As the downstream is an oil and gas investment, historically the company’s performance lags oil prices by about 1-2 years. The previous stage top of oil prices was in October 2018, and even pessimistically expected this to be the top in the next few years.The performance boom is also expected to continue until the first half of 2020.
Moreover, we do not think that oil prices 杭州桑拿网 will go so pessimistic. In 2020, oil prices still hope to pick up again.
In addition to oil prices, a favorable factor in the future is that due to the demand for energy security, the development speed of unconventional oil and gas resources will gradually increase. The development of unconventional resources will lead to the expansion of demand for non-ordinary steel pipes, and the company will naturally benefit as a key supplier.At the same time, the company’s performance gradually developed.
At present, the orders on hand are full. First, the performance of new orders in 2017-2018 is maintained at 9.
The initial high was 7; the second was that the pre-received funds created a new high since the listing. As of June 30, 2019, the company’s pre-received funds were as high as 3.
750,000 yuan, mainly due to increased orders on hand.
As the order was full, the company’s bargaining power increased.
In addition, the company strives to increase its yield by internal tapping and other methods, thus continuously increasing the margin of production and sales in recent years.
The company has two projects under construction.
69 ppm is at the second highest level in history, and the production capacity must be expanded in the future.
It is expected that the median volume and price will go up.
Investment suggestion: To sum up, we are optimistic about the company for the following reasons: (1) The company’s valuation is located in the historical bottom area, which completely reflects the rebound in the current earnings boom and still has room to repair.
(2) The market is not expected to switch to a high dividend yield next year. Since 2018, the interest rate of government bonds has fallen sharply to around 3%, and the company has yet to discover value-for-use funds.
(3) Due to the lag of the company’s performance relative to oil prices, the company’s prosperity is expected to remain until the first half of next year, even in pessimistic scenery. Therefore, the acceleration of the development of domestic unconventional oil and gas resources is a long-term favorable factor, which will smooth out the periodic attributes and helpEstimated to improve.
(4) The potential restart of nuclear power and the speeding up of construction.
We expect net profit attributable to mothers to be 4 in 2019-2021.
5.5 billion, 5.
1.1 billion, 5.
31 trillion, a year-on-year growth rate of 49.
25% and 3.
99%, equivalent to EPS.
54 yuan, 0.
61 yuan and 0.
63 yuan, corresponding to PE is 14.
4X and 12.
0X, upgrade company rating to “Buy”.
Risk reminder: The duration of the boom in the oil and gas industry is below expectations; the company’s product orders are below expectations;