\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 72 Gansu Shangfeng Cement Co.Ltd(000672) )
High quality cement enterprises in East China are located in the northwest and southwest to broaden the development space Gansu Shangfeng Cement Co.Ltd(000672) was established in Zhuji, Zhejiang Province, focusing on the production and sales of building materials products such as cement, clinker and aggregate. More than 80% of the company's business income comes from East China. In recent years, the company's cross regional layout has entered the northwest and southwest markets, with production and construction capacity in Ningxia, Xinjiang, Inner Mongolia, Guizhou and Guangxi. As of 21h1, the company has an annual capacity of 14.75 million tons of clinker, 17.5 million tons of cement and about 7.7 million tons of clinker under construction; Benefiting from the new production capacity and the technical transformation of production line, the cement clinker sales volume of the company in 20 years / 21h1 reached 16.99/9.76 million tons, a year-on-year increase of + 4.2% / + 33.5%; The price per ton of cement clinker of 21h1 company in 20 years is 321 / 319 yuan / ton. As the subsequent capacity under construction is gradually completed and reaches the production capacity, the growth space of the company is expected to be further released.
Under steady growth, demand is still in a high platform period, and the willingness of supply coordination is stronger. The medium and long-term industry pattern is expected to be continuously optimized. Although the total demand for real estate is expected to remain at a high level of more than 2.2 billion tons year-on-year, the marginal output of real estate is expected to remain at a stable level in the year-on-year recovery period, although the total demand for infrastructure is expected to remain at a high level of more than 2.2 billion tons. In the context of shrinking demand, the willingness of enterprises to cooperate on the supply side in order to maintain the steady development of the market is expected to increase, and the cross shareholding of leading cement enterprises in the near future is expected to jointly promote benign competition in the industry and further optimize the industry pattern. The medium and long-term double carbon policy puts forward higher requirements for enterprises' carbon emission reduction technology and cost control ability. The advantages of leading enterprises are prominent, and the cash on the account of leading cement enterprises is sufficient. A new round of integration and merger has been started, and the long-term pattern of the industry is improving.
The "t" layout realizes effective cost control and leads the industry in profitability. The company adopts the layout of clinker base - Yangtze River water transportation logistics - grinding station. It has high-quality limestone mines with independent mining rights in the core clinker base to ensure the long-term stability of clinker production, expand the transportation radius by relying on the Yangtze River waterway, effectively reduce the transportation cost, and directly connect the downstream demand by relying on the cement grinding station of Huadong Linjiang Distribution Bureau, so as to fully grasp the advantage of regional price elasticity. In the past 20 years, the company's cost per ton of cement clinker was 169 yuan, and its cost control ability was leading; The gross profit per ton in 20 years is 152 yuan, second only to Anhui Conch Cement Company Limited(600585) . Thanks to the excellent cost control ability, the profitability of the company is leading in the industry. In 20 years, the net profit of the company's cement clinker per ton to the parent company reached 120 yuan / ton, and the roe in 20 years was 33.2%, ranking first among Listed Companies in the same industry.
Aggregate and environmental protection industries are extended to jointly promote the growth of enterprises. Based on the main business of cement clinker, the company extends the industrial chain around aggregate and environmental protection. In terms of aggregate business, thanks to sufficient limestone resources, the gross profit margin of the company's aggregate business has reached nearly 80%. Benefiting from the new production capacity in Ningxia, 21h1 company sold 5.32 million tons of aggregate, a year-on-year increase of 56%. At present, the company's aggregate production capacity is about 15 million tons, and the subsequent target production capacity is more than 30 million tons. The contribution of aggregate business is expected to continue to expand. In terms of hazardous waste treatment, 21h1 cement kiln collaborative disposal, hazardous waste landfill, oil sludge treatment and other projects in Ningxia and Anhui have been put into operation, with a disposal capacity of about 500000 tons, a revenue of 57.81 million yuan and a net profit of 19.79 million yuan in 21h1, and strive to exceed one million tons of annual production capacity in the future.
Investment in emerging industries continues to advance and is expected to gradually contribute to earnings in the future. Based on the main business of cement and building materials, the company moderately carries out investment in emerging industries, tries to optimize resource allocation, balance the cyclical fluctuation risk of a single industry, and cultivate new economic benefit growth points of enterprises. The company's investment scope focuses on the core technology innovation field of the national "neck" problem. Previously, Hefei Jinghe integration, a joint-stock company, submitted an IPO application on the science and innovation board in May 21, which was accepted by the Shanghai Stock Exchange. In 22 years, the company plans to continue to use the quota of no more than 500 million yuan for new economy equity investment. In the follow-up, with the smooth listing of relevant companies, the investment income is expected to be released gradually and share the development dividends of emerging industries.
Profit forecast and investment suggestions: the company is a growing enterprise in the cement industry. Through the steady development of "one main body and two wings", the production capacity of cement clinker and aggregate can achieve rapid growth in the next few years, and the investment in emerging industries is advancing steadily, which is expected to gradually contribute to the income. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 2.22 billion, RMB 2.82 billion and RMB 3 billion, corresponding to 8, 6 and 6 times of PE. It will be covered for the first time and rated as "overweight".
Risk warning: market demand fluctuation risk; Supply side constraint relaxation risk; The investment income of emerging industries is less than the expected risk; Risk that the production capacity is less than expected; Risk of information lag or untimely update.
