The hottest supply side dividends are those highly

2022-10-22
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Supply side dividends from domestic to overseas, these iron ore companies that are highly dependent on China have doubled

domestic supply side reform has brought dividends to the domestic steel industry, but also brought some "benefits" to large overseas miners

on August 2, Rio Tinto, a mining giant, announced its semi annual report. Its net profit for the half year was $3.3 billion, up 93% year-on-year, nearly doubling. Rio Tinto said that in the first half of the year, relying on the rise in iron ore prices, it obtained consolidated sales revenue of more than US $19.3 billion, an increase of US $3.8 billion year-on-year. It is worth noting that, as one of China's major iron ore suppliers, Rio Tinto derives more than 40% of its annual revenue from the Chinese market

the rise in ore prices is mainly due to the rebound in the prosperity of the domestic steel industry. The total profits of domestic key enterprises in the first five months have exceeded the full year of 2016. Similarly, the performance of domestic steel enterprises in the first half of this year is also relatively satisfactory

as of August 3, four listed companies in the iron and steel sector, Shaogang Songshan, Shandong Iron and steel, Linggang Co., Ltd. and Hongda mining, have released their semi annual reports. Except for the loss of Hongda mining, the other three companies have achieved a significant increase in their semi annual net profits:

Shaogang Songshan achieved a net profit of 650million yuan in the first half of the year, reaching the best level in history, while the net profit loss in the same period last year was 229 million yuan

in the first half of this year, Shandong Iron and steel achieved an operating revenue of 31.56 billion yuan, a year-on-year increase of 41.32%, and a net profit of 596 million yuan, a year-on-year increase of more than 20 times

in the first half of the year, Linggang achieved an operating revenue of 8.363 billion yuan, a year-on-year increase of 37.01%, and a net profit of 405 million yuan, a year-on-year increase of more than 6 times

today, the A-share market has become the world of steel and nonferrous metals, with the steel sector rising by more than 3%. In terms of individual stocks, 4 stocks of Masteel, Linggang, Zhongyuan special steel and Anyang steel rose by the limit, while 9 stocks of Fangda special steel, Xingang, Nangang and Shandong iron and steel rose by more than 5%

iron ore business performance reversed

on August 2, Rio Tinto, an international mining group, released its operating results for the first half of the year. Driven by the rising prices of iron ore and other bulk commodities, Rio Tinto, the world's second largest iron ore producer, made a net profit of $3.3 billion in the first half of the year, a year-on-year increase of 93%. Rio Tinto also announced a cash dividend of up to $3billion to shareholders in its financial statements

data show that Rio Tinto achieved consolidated sales revenue of more than US $19.3 billion in the first half of the year, an increase of US $3.8 billion year-on-year. Among them, the current profit was $3.9 billion and the net profit was $3.3 billion. The decrease was partly due to the exchange loss of $400million and the net impairment charge of $200million

in recent years, benefiting from the rise in ore prices, the profits of international miners have increased significantly

Rio Tinto's 2016 financial report shows that Rio Tinto's consolidated sales revenue last year was US $33.8 billion; The current income was US $5.1 billion, an increase of 12% year-on-year; The net profit also turned around, rising sharply from a loss of $866 million in 2015 to a net profit of $4.617 billion in 2016

on July 28, Vale of Brazil released its second quarterly report, which also showed the same trend. According to the second quarter report, Vale achieved a net profit of more than $2.7 billion in the second quarter of this year, which is also the sixth consecutive quarter in which the company achieved profit. Previously, in February this year, Vale announced that it had achieved a turnaround in fiscal 2016, with a full year revenue of $29.363 billion and a net profit of $3.982 billion

iron ore port inventory has exceeded 100 million tons in a row.

the rise in iron ore prices is the main reason for the increase in profits of large miners. Driven by the strong demand for steel in China's steel industry, such as capacity reduction and infrastructure, the price of imported iron ore remained high in the first half of this year

take the CIF price of imported iron ore with 62% grade as an example. At the beginning of this year, the price soared from $72/ton to a high of $92/ton. Among them, the most vulnerable equipment generally rebounded in June after a short fall, reaching $62.41/ton on June 30. (on July 31, this price rose again to $71.75/ton.)

the shipment volume of iron ore from Australia rebounded significantly, while the shipment volume from Brazil fell slightly. As of the week of July 23, the shipment volume from Australia to China was 13.39 million tons, up 2.39 million tons/21.7% in a week. The total shipment volume from Brazil was 7.04 million tons, down 280000 tons/3.9% in a week

since this year, the iron ore port inventory has reached more than 100 million tons for several consecutive months. In terms of the latest port, the ore inventory fell by 890000 tons to 142.31 million tons, and the average daily port dredging volume was 2.895 million tons. The overall high level of inventory has been repeated recently, which has fallen back from the previous high point

despite the high inventory and the in-depth promotion of capacity reduction in the steel industry, Goldman Sachs and other institutions are still optimistic about the price trend of iron ore in the second half of the year

Goldman Sachs raised its three-month iron ore price target to $70 per ton in a research report at the end of July; The iron ore price target at the end of the year was also raised from $55 to $60 per ton. At present, it is still applied in some places and the iron ore price target for 2018 was raised

Goldman Sachs believes: "China's supply side reform and capacity reduction actions will continue to support Chinese steel mills to make profits. In addition, the global production recovery is also expected to be stable, which in turn will support the growth of ore consumption."

however, CICC is not so optimistic. CICC believes that as of June, the delivery rate of most mainstream suppliers is less than 50%. In the second half of the year, the delivery volume of mainstream mines will increase seasonally, and it is expected that the pressure on the supply side will be highlighted. For 3 months, 6 months and 12 months, the iron ore price is predicted to be $54/ton, $45/ton and $42/ton respectively

the profits of the steel industry are amazing

not only miners, the first half of 2017 may be the best time for most steel enterprises in the near future

with the advance of supply side structural reform, the supply and demand situation of the steel market tends to improve in the first half of the year, steel production increases, steel prices rise, most enterprises' benefits improve significantly, and the industry operation presents a good situation

the latest data show that the national crude steel output in the first half of the year was 420 million tons, an increase of 4.6% year-on-year. From January to June, the national average daily output of crude steel was 2.3191 million tons, of which the daily output of crude steel in June reached 2.441 million tons, the highest level in history

7 during the month of meeting at 2 p.m. in the large conference room, a number of Listed Companies in the iron and steel sector have released performance expectations for a significant reduction in profits and losses in the first half of the year. The earnings of key iron and steel enterprises previously released by China Iron and Steel Association showed that the total profits of enterprises in the first five months had reached 37.885 billion yuan, exceeding the annual profits of 33.15 billion yuan in 2016, and the sales profit margin was 2.68%, up 1.36 percentage points from 2016

by the end of July, four of the 29 stocks in the steel sector had disclosed their semi annual results. Among them, the net profit of Shandong Iron and steel in the first half of the year increased the most, as high as 2023.13%. In the first half of this year, the operating revenue of Shandong Iron and steel increased by 41.32% year-on-year, and the net profit excluding non recurring profits and losses increased by about 767% year-on-year. In addition, the net profit of Linggang in the first half of the year increased by 608.08% year-on-year, and the net profit of Shaogang Songshan in the first half of the year was 650million yuan, reaching the best level in history

according to insiders, in the first half of 2017, about 120 million tons of "ground bar steel" production capacity was cleared out of the market, and its corresponding construction steel, especially rebar, increased dramatically, while the plate price was affected by the downturn in the automotive market, and the trend was weak, but this did not affect the startling profits of steel enterprises

the gross profit of screw thread steel is now more than 30%. The gross profit of 1 ton of screw thread steel is more than 1000 yuan, and the current spot price is less than 4000 yuan. At present, the popular saying in the industry is that rolling mills are comparable to money printers

can the strong market of steel stocks continue

the industry is expected to improve, and the performance of the steel sector in the secondary market is eye-catching. Since June this year, the steel sector has been making rapid progress, with a cumulative increase of more than 30% in the past year or so

as the top priority of the supply side structural reform of the iron and steel industry, the action of banning "ground bar" has banned more than 630 "ground bar" production enterprises in the first half of this year, involving a production capacity of about 140 million tons to 160 million tons. The iron and steel industry has achieved significant results in reducing production capacity, while the iron and steel industry has continued to recover, the policy has been favorable, the operating capacity has been improved, and the profitability of steel enterprises has rebounded significantly

Changjiang Securities believes that after the rapid rise of steel stocks in the early stage, the risk of peaking share price should come from the valuation side on the premise that the fundamentals have not deteriorated. Starting from 2000, the current sector Pb quantile is 58.83% and PE quantile is 61.87%. If the 2007 high point is excluded, the current valuation quantile will be higher. Therefore, this round of relative stagflation stocks, when the oil pump and hydraulic system produce internal leakage and external leakage, the safety margin is higher, and the risk return ratio may be relatively stable

GF Securities said that the supply and demand boom of the domestic steel market continues. It is expected that the steel price trend will be strong in August, and the ore price will fluctuate, and the profit will remain high

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