Last week, although the overall atmosphere of institutional research was not strong, there are still companies that have obtained more than 100 institutional online research. On February 26, 168 institutions, including SAIC Morgan, Tianhong fund, Danshui spring investment and Chengquan capital, participated in the Minguang video conference. A week ago (February 19), Mitsui Minguang also received a number of institutions including China Europe Fund, Harvest Fund and Chongyang investment. Last week, the stock price of Minguang steel fell 6.67%, and the current price is 7.83 yuan / share.
In the survey, Minguang of Sangang introduced that due to the impact of the Spring Festival holiday superimposed on the epidemic situation, the terminal demand lagged behind and the social steel inventory reached a historical high. As of February 25, Fujians social storage is about 2.08 million tons, including about 1.25 million tons of Minguang brand steel, which is high in storage. It is expected that by the early March, the steel inventory will still increase and the sales pressure will be high. As for the follow-up market situation, Minguang Steel Co., Ltd. predicted that the epidemic caused high steel inventory and increased pressure on steel price. Although the price of iron ore has declined, it is inevitable that the enterprise benefit will be affected in the first quarter. In the medium and long term, the demand will be delayed but will not disappear, and the epidemic will not fundamentally change the supply and demand pattern. It is expected that regional market demand will start to recover and gradually realize de stocking in March.
Hualing iron and Steel Co., Ltd. of the same industry is also favored by institutions. On February 25, more than 30 institutions, including Huaxia Fund, Xinhua fund and CICC, investigated Hualing iron and steel, which was also the companys third reception agency after the festival. Hualing Steel said that in the short term, some of the steel plants were affected by the epidemic, and under high storage pressure, some of the steel plants may have arrangements for maintenance and production reduction, and the steel supply is expected to decline. The demand side was also affected by the epidemic and delayed to return to work. Some steel traders were not willing to purchase. Recently, steel prices also fell. In the medium term, if the epidemic situation is under control, the implementation of policies to stabilize the economy with delayed demand may stimulate steel demand and support the recovery of steel prices. Generally speaking, the steel price will maintain a volatile trend, and the profit space of steel enterprises will be narrowed in the short term. The current market environment is complex, and the overall operating results in the first quarter also depend on the resumption of downstream customers in March.
It is worth noting that the performance of Minguang and Hualing iron and steel in 2019 is predicted to decline. The companys operating revenue in 2019 was 45.501 billion yuan, up 25.53% year on year, and the net profit attributable to the parent company was 3.676 billion yuan, down 43.51% year on year. In January, Hualing iron and steel released the 2019 annual performance forecast, and the company expects to achieve a net profit attributable to the parent of 4.2-4.6 billion yuan, a year-on-year decline of 32.15% - 38.05%.
However, the decline in performance does not change the optimism of some institutions for steel companies. Recently, Huatai Securities rated Minguang Steel Co., Ltd. as an increasing shareholder, while Huabao securities rated Hualing Steel Co., Ltd. as an increasing shareholder. Huachuang securities research paper believes that steel plate has a chance to rebound. In the medium term, the short-term impact caused by the epidemic crisis does not affect the long-term profitability of the steel industry. Under the undervalued state, the steel plate has a configuration value. In the short term, downstream demand is continuing to recover, and the decline of iron ore price gives way to profit margin. The continuous positive policies have a significant boost to the future expectations, and the three have jointly promoted the rise of the steel plate.