Profitability means enterprise profit ability. The size of the profitability is a relative concept, namely relative to certain resource input and a certain income, the higher the profit margins, the stronger the profitability, and vice versa. Combining with the characteristics of the operation of the iron and steel industry, based on the principle of comparability of financial indicators, the consistency principle, this article 24 listed steel companies as the research object, select 3 quarter of 2014 years ago on profitability evaluation sales gross profit margin, net interest rate, ebit margin (ebit/revenue), five indices, return on equity, earnings per share for steel the profitability of listed companies is analyzed.
Sales gross profit margin
Sales gross profit margin is to point to in a certain period of time, enterprise business gross margin and the ratio of operating income, shows that the enterprise operating income can bring how many gross profit, is an indicator of enterprise main business profitability. Three quarters of 2014 years ago, SW, shenyin wanguo PuGang industry average sales gross profit margin of 7.23%, compared with the same period in 2013 increased by 0.71%. In 24 listed steel companies, there are 10 listed steel companies sales gross profit margin is higher than the industry average (see chart 1), including sales gross profit margin among the top three of the listed company angang, baosteel, is it? Yan ST cultivation, more than 9.5%. Among them, angang steel sales gross profit margin is as high as 11.37%, compared with other listed companies to maintain a higher lead. In addition to the chongqing iron and steel, the other 23 listed steel companies sales gross profit margin are positive, but steel songshan sales gross profit margin is only 0.14%, close to losses.
By the calculation, operating income and sales gross profit margin of the correlation coefficient is 0.5057, gross profit and sales gross profit margin of the correlation coefficient of 0.6394. This suggests that revenue and sales gross profit margin is moderate correlation, namely the operating income of listed companies, the greater the sales gross profit margin and then there is the possibility of larger, such as baoshan iron & steel, hebei iron and steel, anshan iron and steel shares revenue scale among the six, its sales gross profit margin ranked the top four; 3 min light steel, steel songshan, chongqing iron and steel business income in the six, after its sales gross profit margin are the back four. This phenomenon is in conformity with the steel industry has the characteristics of the economies of scale.
In addition, gross profit and sales gross profit margin is moderate correlation, namely the listed company’s gross margin is smaller, the smaller is likely to be its sales gross profit margin, such as three steel fujian light, the gross profit of bayi iron and steel, steel songshan, chongqing iron and steel scale among the four, its sales gross profit margin all the back four, and the four listed steel companies in two ranks highly consistent; Gross profit and sales gross profit margin of the correlation coefficient is greater than operating income and the correlation coefficient of sales gross profit margin, on the one hand, reflected in gross margin in 2014 is to determine the size of the steel sales gross profit margin of listed companies and the primary factor, on the other hand is embodied in the iron and steel listed companies efforts to reduce operating cost and effect determines the size of the enterprise in 2013 gross profit, thus affecting the sales gross profit margin.
Sales net interest rate is analysed
Sales net interest rate refers to the ratio between the enterprise net profit and revenue. In general, the higher the sales net interest rate, the enterprise net profit ability is stronger. 2014 years ago, three quarters of SW PuGang industry average sales net interest rate of 0.63%, compared with the same period in 2013 increased by 0.04%. In 24 listed steel companies, listed companies only nine sales net interest rates higher than the industry average (see chart 1), the baosteel sales net interest rate of 3.69%, at the top, leading second angang is 2.08%. 15 listed steel companies sales net interest rate is positive, but the anyang iron and steel, valin iron and steel, baotou steel shares, descibes shares four listed companies sales net interest rates below 0.5%, belong to a slight profit or break even; Nine steel sales net interest rates negative of listed companies, including three min light steel, shougang shares, masteel shares, shandong iron and steel, chongqing steel five listed companies for 3 consecutive years ago 3 quarter sales net interest rates negative. Chongqing iron and steel 2014 third quarter sales net interest rate of 12.13%, losses.
By the calculation, operating income and sales net interest rate of the correlation coefficient is 0.4185, net profit and sales net interest rate of the correlation coefficient of 0.6109. This suggests that impact 2014 years ago 3 quarter sales net interest rate of the primary factor is the size of the net profit, such as baosteel, angang steel, wuhan iron stake, emerging condition.and four listed company net profit size sorting are placed in the top five, its sales net interest rates are in the top four; Shaogang songshan, shandong iron and steel plant, bayi iron and steel, chongqing steel four listed company net profit size sorting all the back four, its sales net interest rates also the back four.
Available operating revenue and sales net interest rate but no such high fit, operating income was positively correlation with sales net interest rate, at the same time, operating income and net profit difference coefficient is 0.7845, shows that 2014 more prominent feature of economies of scale in the steel industry, the business income, the greater the earnings of listed companies have been relatively well.
Ebit margin analysis
Ebit margin reflects the enterprise operating margin, is the enterprise management to obtain available to all investors (shareholders and creditors) distribution of profit-seeking enterprises operating income as a percentage of all. Earnings Before Interest and Tax (EBIT, way Before Interest and Tax) refers to pay Interest and profit Before Tax (EBIT = operating profit + investment + non-operating income non-business expenses + Before annual income adjustment). EBIT by excluding tax and interest, can make the investors to evaluate projects don’t have to consider the income tax rate applicable to the project and the financing cost, thus facilitating investors will project in the different capital structure for investigation. Between different enterprises in the same industry, no matter how much income tax rate difference is located, or how much capital structure differences, to be able to take out the EBIT such indicators to more accurately compare profitability. The same companies on the analysis of the profitability of change during different periods, using EBIT more net profit also more comparable.
Ebit margin among the top five listed companies of the steel, baoshan iron & steel, hebei iron and steel, does ST cultivation, angang steel, anyang iron and steel. The five listed steel companies ebit margin more than 4%, including baosteel and 23 other listed companies maintained a big lead. LingGang corporation, shandong iron and steel, steel songshan, bayi iron and steel, chongqing steel five listed companies ebit margin is negative, bayi iron and steel, chongqing iron and steel of the index on the low side, and other listed companies have a larger gap. (see table 1)
By the calculation, operating revenue and ebit margin of correlation coefficient is 0.4487, earnings before interest and tax and ebit margin of correlation coefficient is 0.6418, due to the correlation coefficient is greater than the former the latter, that affect the third quarter of 2014 years ago ebit margin of the primary factor is the size of the earnings before interest and tax. Such as baoshan iron & steel, hebei iron and steel, anshan iron and steel shares three listed companies earnings before interest and tax sort are the top three, their ebit margin ranked in the top four; Descibes stake, LingGang corporation, shandong iron and steel, steel songshan, chongqing iron and steel, bayi steel 6 listed company earnings before interest and tax ranking, ebit margin ranked in the six, and the same place.
On 24 listed steel companies ebit margin comparing with sales net interest rate, the greater the difference between them, indicates that the listed company the greater the burden of tax and financial costs. Shougang shares, shares of liuzhou iron &steel group co.are presented.the, bayi iron and steel and other 14 ebit margin of listed companies with sales net interest rate more than 2%, of which does ST cultivation, baotou steel, hebei iron and steel, valin iron and steel, anyang iron and steel shares five the difference of more than 3% of listed companies, and the corresponding to the five listed companies financial expenses account for more than 3% of the total operating revenue; Chongqing steel ebit margin and sales net interest rate more than 10%, the financial cost up to 999 million yuan, accounting for the proportion of business income of 10.68%. Taigang stainless, jisco HongXing 2 listed company’s financial costs accounted for the proportion of business income while under 1.5%, but the absolute value of the larger, taigang stainless financial expenses reached 925 million yuan, jisco HongXing financial costs 1.043 billion yuan. The above situation shows that higher finance charges ate the profit margins of steel enterprises, and make chongqing iron and steel and other difficult enterprises operating conditions deteriorate further.
Return on equity is analysed
Return on equity refers to the ratio of net income and average Stockholders’ equity. The index from the perspective of business owners to measure return on investment, reflect the size of the investment remuneration obtained business owners; At the same time to measure the company to shareholders invested capital utilization efficiency. Through the analysis of the index, to judge investment benefit of enterprise, understand the level of enterprise management, and owners to assess its invested enterprise capital value of degree of basic way. The higher the index, shows that the net profitability of listed companies, the greater the degree of investors’ interests protection. Securities market in our country, return on equity should be more than 7%, three consecutive years and three years of average more than 10% of the listed company are eligible for a rights issue.
The third quarter of 2014 years ago the SW PuGang industry average return on equity of 1.29%, down 0.28% compared with the same period in 2013. In 24 listed steel companies, there are 10 more than the value (see table 1), including baosteel, emerging pipes, liuzhou iron &steel group co.are presented.the return on equity shares in the top three, more than 3.5%. In 14 below the industry average level of listed companies in chongqing iron and steel, steel songshan, bayi steel net assets yield is below 15%, bayi steel net assets yield even dropped to 40.91%.
By calculation, the average shareholders’ equity and roe correlation coefficient is 0.2013, net income and net assets yield the correlation coefficient is 0.5146, because the latter’s correlation coefficient is greater than the former, shows that impact 2014 years ago three quarterly return on equity of the primary factor is the size of the net profit. But this positive correlation is more performance for the smaller the net profit, return on equity is smaller, such as baotou steel corporation, descibes shares, shougang shares, 3 min, jisco HongXing, ma steel, light steel LingGang corporation, shandong iron and steel, chongqing iron and steel, steel songshan, bayi steel 11 net profit of listed companies are in the 11, its return on equity is also in the 11, and places. But 24 listed companies did not clearly show the net profit, the greater the statistical characteristics of return on net assets is relatively greater.
Earnings per share is analysed
EPS (Earning Per Share, or EPS, is also called the after-tax profit Per Share, EPS) refers to the profit after tax and the equity ratio of the total, is a common shareholders each hold a receive from the enterprise need to assume the enterprise net profit or net loss. Earnings per share is generally used to reflect the operating results of an enterprise, to measure common profit and risk of investment, investors and other information which users evaluate enterprise profit ability, predict enterprise growth potential is one of the most important financial indicators.
In 24 listed steel companies, there are 16 listed company earnings per share is positive (see chart 1), in which emerging pipes, angang, baosteel, new steel shares four listed companies earnings per share were more than 0.1 yuan, baosteel were greater than earnings per share 0.3 yuan, compared with other listed companies have more obvious earnings advantage; Although emerging condition.and earnings per share was ranked no. 2, below the same period in 2013; Hebei iron and steel shares, shagang, anyang iron and steel, valin iron and steel, descibes stake, baotou steel shares, shougang shares in seven of the listed company earnings per share, though positive, but are less than 0.05 yuan. Baotou steel shares, shougang shares in earnings per share less than a penny. In 14 below the industry average level of listed company, the shandong iron and steel shares, LingGang, shaogang songshan, chongqing iron and steel plant, bayi steel five ranks poorly on the specific listed companies, including the loss to 1.62 yuan per share of bayi iron and steel, and other larger gap between the listed company profitability.
The listed company profitability analysis
The profitability of listed companies after 5 indicators data standardizing, generation of main component analysis model, based on the model calculation result:
Sales gross profit margin, net interest rate, ebit margin, return on equity, earnings per share five indicators was a positive correlation with corporate profitability. Steel profitability of listed companies of five evaluation index weights of sort of ebit margin, return on net assets, the net interest rate of the sales, sales, gross margin, earnings per share, including sales gross profit margin, earnings per share index weight coefficient of the two basic approach.
Principal component model gives ebit margin of the highest weight value, reflecting the 24 listed companies exist great differences in earnings before interest and tax, showed that the current situation of interest (financial expenses), income tax for steel net profit of listed company, the influence of the cash flow is more and more big. This aspect suggests iron and steel enterprises, especially ebit and net profit have larger gap of iron and steel enterprise, when looking for a corporate profit and loss balance multi-purpose marginal cost method to calculate profit, can’t use the full cost method to calculate profit, to scientific decision for enterprise’s production and operation; On the other hand suggests investors in evaluating the suitability of a certain iron and steel enterprise investors, namely to consider tax rates and the cost of financing, and by excluding tax rates and under the premise of the cost of financing, in view of the development of the enterprise can be an investment.
Principal component model emphasizes the importance of the return on equity, on the one hand, shows that appeared in the steel industry supply and demand unbalanced environment, first of all listed companies should follow the asset value, namely the survival is the first priority, and steel listed companies and the survival of an enterprise is consistently profitable by profit to continuously optimize enterprise capital structure, the enhancement enterprise’s ability to resist external risk; Explain enterprises achieved consistently profitable, on the other hand, the rights and interests of shareholders and creditors will be secure, help enterprise to win a variety of external environment factors (such as financial institutions, government) to enterprise’s trust and support.
Principal component model emphasizes the importance of the sales net interest rate, according to is between steel listed companies there is biggish difference in net profit, revealed in a dilemma under the premise of industry development, profitability has greater differentiation between enterprises; 2 it is to suggest we have a solid foundation for enterprise survival and development is to create more profits, create more net profit, the enterprise only to keep its continuous development and expansion of the money needed.
According to principal component model calculated by the listed company earnings indexes and sort (see chart 2), 24 listed steel companies score the median value profit was $181, the arithmetic average of 171. According to this decision, profitability score at around $180 is the intermediate level in the industry. LingGang corporation, shandong iron and steel, steel songshan, chongqing iron and steel, bayi steel five scores with intermediate level of the listed company earnings gap between more than 20, shows that its earnings and other 19 listed companies have a large gap; Baosteel profit score ranked first, thanks to the listed companies in the sales net interest rate, ebit margin, return on equity, earnings per share four indicators ranked in the lead.