Watch the iron and steel industry in combination with CCTV programs, and take a positive view of the opportunities of Steel Union in the industry transformation

There is no need to repeat the current situation of the steel industry. As reported in the program, from January to May 2013, the crude steel output of national key steel enterprises was 320 million tons, an increase of 8% year on year, but the profit margin of sales was only 0.19%. 43% of steel plants lost money. The return on investment of steel enterprises has been lower than the current deposit interest rate. At the same time, a large number of steel traders went out of business, and warehouses were vacant.
The outstanding problem in the industry is that after the collapse of the original credit system, the first thing for practitioners to think about is not how much money they can earn and how much cost they need, but who they will not be cheated when doing business with.
(1) It is difficult to trust various inquiries from various traders and certificates from warehouses. On this basis, if steel mills directly put goods in a warehouse, the reliability is relatively high.
(2) For steel mills, the traditional advantage of relying on traders' warehouse receipt financing to provide reservoirs has long been gone, and it has become a production based on sales. Large steel mills are good, but small and medium-sized steel mills urgently need to open sales channels.
At this time, the spot platform of the steel factory engaged in by Shanghai Steel Union is to provide a third-party access. The steel factory places the goods on the platform of the steel union. After the trader places an order, the steel union will designate the steel factory to deliver the goods to the designated warehouse, and supervise the daily warehouse in and warehouse out status of the warehouse. In this process, TISCO linked several parties that did not trust each other, and selected traders who really needed to trade, trusted warehouses, logistics and access to small and medium-sized steel plants that needed to open channels through their own professional capabilities to ensure the security of this process.
There is no exclusivity in the business of Steel Union. Steel mills, warehouses and even large traders in the whole trade chain may engage in similar businesses. However, we need to emphasize that the participants in the industry do not have a fair position as a third party, and the starting point of their business is to maximize their capabilities related to their own links, and then they will face a relatively large bottleneck.
What Steellink does is not as fast as the market thinks. Online transactions of bulk commodities are not as fast as clothes and food. A single transaction is of great value and most of them will cooperate with the financing process. Steellink's small scale and awareness of risk control must not allow the expansion of this business to exceed its own management capabilities. But fortunately, Steellink has no competitors in the third-party information service provision in the steel industry, which is very rare in the entire media Internet and even in all A-share industries. Therefore, we believe that its business exploration is just a matter of time, and will grow in the process of matching its capabilities step by step.
At present, the market value of Ganglian has reached 2 billion, which is high from the perspective of PE. However, from the perspective of the company's business layout, original information in the industry and its extremely stable position, the company's value is still undervalued. The market value of another company in the industry that provides website building services and information collation in different industries is still 4 billion. We believe that as more and more investors begin to pay attention to and understand Steellink, they will further realize the company's value and take a positive view of the company's future market value space.
Profit forecast and investment suggestions
It is estimated that the Company's EPS will be 0.33 yuan and 0.47 yuan respectively from 2013 to 2014. In 2013, from the perspective of cash basis, we believed that the newly developed data terminal business and the gradually on track steel trade financing business of the company could withstand the performance drag caused by the advertising downturn. However, it will take some time for the performance to recover, and the company's recent valuation level will still be relatively high due to the impact of cyclical prosperity. We suggest that long-term investors pay attention to the platform value of the company when the performance is low and the valuation recognition is poor; Investors who focus on the medium and short term can pay attention to the changes in the cash flow statement of the parent company of Steellink to judge the possible inflection point of the company's business in advance. Maintain the "buy" rating, based on 50 times PE in 2013 and 40 times PE in 2014, with a target price range of 16.5-18.8 yuan.
Main risks: The negative impact of the continuous downturn of the steel trade industry on advertising exceeded expectations; Development progress of data terminal and steel trade financing services; The relocation of the company's office brings new pressure on additional costs.