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High performance, steel plate stabilized rebound

On Friday, the steel sector rebounded sharply, ranking second in the 28 industries at Shenwan Level 1, with the steel industry index rising 2.49%. In the plate, Hongda Mining rose 9.43%, Dongfang Tower rose 9.43%, Hegang shares, Daye Special Steel, up more than 5%, more than 4% of the shares.

For the steel sector, analysts said that the current seasonal demand ring improvement, inventory decline makes short-term steel prices have support, the recent upward correction of macro expectations is expected to make Steel Plate valuation repair; weakening environmental expectations make medium-term steel prices under pressure, long-term real estate and infrastructure demand is facing greater downward pressure. Making macro expectations still pessimistic, the industry is facing the risk of fundamental and macro expected resonance downward.

High performance innovation

The data showed that the average price of threads in the third quarter was 4357 yuan / ton, 9.03% higher than that in the second quarter and 9.00% higher than that in the same period of last year. The prices of all kinds of steel were on the rise. China Merchants Securities said that under tight supply and demand balance, steel prices remained high, and the gap between raw material prices and scissors widened. On the one hand, due to the third quarter downstream real estate, infrastructure for the start-up season (July, August real estate new construction area was 14.4%, 15.9%, respectively, a year-on-year high), demand was not bad; and the supply side due to environmental restrictions on production pressure. The output (daily average crude steel output of 2.621 million tons and 2.591 million tons in July and August) and the start-up rate were down from the previous quarter.

China Merchants Securities estimates the gross profit per ton of steel, the third quarter five varieties lag behind January gross profit of 1079 yuan / ton, 9.8% growth compared with the second quarter, 27.7% growth compared with the third quarter of last year, the fourth quarter of last year 1055 level, the third quarter profit is expected to exceed the fourth quarter of 2017, a new round of high.

From the announcement of earnings forecasts and quarterly reports of steel companies, a number of steel companies in the third quarter earnings forecasts show good growth. The announcement of River Steel shares is expected to profit about 3 billion 300 million yuan -35 billion yuan in the first three quarters of this year, an increase of 50.34%-59.45% over the same period last year. He Steel shares said that in the first three quarters, the steel market environment remained stable and steel prices steadily increased. Liugang stock announcement, the first three quarters of the net profit attributable to shareholders of listed companies compared with the same period last year, will increase 1.836 billion yuan to 2.162 billion yuan, an increase of 146% to 172%. Anshan Iron and Steel Co., Ltd. forecast net profit of 6.847 billion yuan in the first three quarters of 2018, an increase of 80.52%. Anyang Iron and Steel announced that the company expects to achieve a net profit of 1.5 billion to 1.6 billion yuan in the first three quarters of the listed company shareholders, an increase of 54% to 64% compared with the same period last year. The company forecast net profit of 5.37-5.57 billion yuan in the first three quarters, up 109-117% year-on-year, according to the company's announcement. During the reporting period, the company's iron, steel and timber production reached new record highs, with the company's first three quarters and third quarter results reaching record highs.

Plate valuation advantage is obvious

Steel continued to perform well, and from the valuation point of view, China Merchants Securities said that steel stocks year-round performance corresponding to PE3.5-6 times, valuation advantage is obvious. According to China Merchants Securities forecast for the full year performance, the mainstream steel stocks corresponding to PE generally in the 3.5-6 times range, the lowest Valin steel is only 3.6 times.

China Merchants Securities (CMS) said it was concerned about the high season and three-quarter quotations under the premise of low valuation and low inventory, taking into account both valuation and performance growth.

Tan Qian, an analyst with Guohai Securities, said last week that Beijing-Tianjin-Hebei and its surrounding areas began to officially limit production, affected by the loosening of the production margin, the prices of different varieties of steel products have fallen back. But this year's production limit is the sintering, converter, blast furnace and other links of production, last year only blast furnace production limit, the actual supply increase is limited. At present, the medium-term logic of the overall demand margin improvement is still valid for the steel plate, the high turnover demand of real estate, and the stabilization of manufacturing investment. And the micro-performance is excellent, after early adjustment, the PE valuation of high-quality stocks returned to the 3-4 times range, valuation and performance matched well.

Meanwhile, Shen Wan Hongyuan securities also hints that the marginal impact of the limitation of production will be weakened, and the steel price will be callback. The limited production in heating season is offset by the increase of output in unrestricted production areas, and the output is expected to be significantly higher than that in heating season last year. It is difficult to find a shortage of supply in the fourth quarter. After the weakening of fundamentals, stock prices are difficult to show. (source: China Securities Daily)
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