\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 585 Anhui Conch Cement Company Limited(600585) )
Matters:
The company released its annual report for 2021. The annual revenue was 167.95 billion yuan, down 4.7% from the adjusted revenue in 2020 (due to the acquisition and merger of conch new energy), and the net profit attributable to the parent company was 33.27 billion yuan, down 5.4% from the adjusted profit in 2020; The company plans to distribute a cash dividend of 2.38 yuan per share (including tax).
Ping An View:
The sales volume of cement clinker decreased slightly and the overall performance was stable. During the period, the company’s revenue and profit decreased by 4.7% and 5.4% respectively, mainly due to: 1) due to the impact of sluggish downstream demand and power and production restriction, the net sales volume of cement clinker during the period decreased by 9.76% to 409 million tons year-on-year, of which the sales volume of self products decreased by 6.5% to 304 million tons year-on-year, and the sales volume of trade business decreased by 18.0% to 105 million tons year-on-year. Although the price of cement clinker increased and the revenue increased by 4.5% year-on-year, the trade revenue decreased by 11.0% year-on-year Drag down the overall revenue; 2) Affected by the sharp rise in raw coal prices, the comprehensive cost of cement clinker increased by 17.78% year-on-year to 203.34 yuan / ton, and the gross profit margin of product sales business decreased by 3.1pct year-on-year; 3) The expenses increased during the period, of which the management expenses increased by 20.5% year-on-year, mainly due to the increase of social security expenses paid by the company for employees. Compared with the epidemic period in 2020, the R & D expenses increased by 103.5% year-on-year, mainly due to the increase of green and low-carbon technology development investment.
The basic sector of cement clinker has developed steadily, and the production capacity continues to expand. During the period, the company’s Hunan Yunfeng cement clinker project was completed and put into operation, and successfully acquired Guangdong Hongfeng, Guizhou xinshuanglong, Yunnan Tengyue and other cement projects. Through new construction and acquisition, the company added 7.2 million tons of clinker capacity and 14.25 million tons of cement capacity; At the end of the period, the clinker production capacity reached 269 million tons and the cement production capacity was 384 million tons. In 2022, the company plans to spend 23.5 billion yuan of capital expenditure, mainly from its own funds, which will be mainly used for project construction, energy conservation and environmental protection technical transformation, M & A projects and equity investment expenditure. It is expected that (excluding M & A) the annual new clinker production capacity will be 4.6 million tons and cement production capacity will be 1.4 million tons; The annual net sales volume of cement and clinker (excluding trade volume) was 325 million tons, a year-on-year increase of 6.9%.
The effect of extending the upstream industrial chain was obvious, and the new energy business was accelerated. During the period, Jiangxi Yiyang aggregate project was completed and put into operation, and mining rights of several aggregate projects were obtained through public bidding; Successful acquisition of commercial concrete projects such as Anhui guanteng group, Yingde Tongde concrete and Shengde concrete; Complete the equity acquisition of conch new energy, and add 19 photovoltaic power stations and 3 energy storage power stations. The annual aggregate production capacity increased by 7.5 million tons and the commercial concrete production capacity increased by 10.5 million cubic meters; At the end of the period, the aggregate production capacity was 65.8 million tons, the commercial concrete production capacity was 14.7 million cubic meters, and the installed capacity of photovoltaic power generation was 200MW. In 2022, it is planned to add 44 million tons of aggregate production capacity, 10.2 million cubic meters of commercial concrete production capacity, and the installed capacity of photovoltaic power generation will reach 1GW.
Investment suggestion: during the period, the company acquired conch new energy. Considering the small proportion of the latter’s revenue performance, we maintained the previous profit forecast. It is expected that the EPS will be 6.75 yuan and 6.91 yuan respectively from 2022 to 2023, and the new EPS forecast will be 7.12 yuan in 2024. The current share price corresponding to PE is 5.5 times, 5.3 times and 5.2 times respectively. From the industry level, under the demand of the central government for steady growth, the subsequent real estate fundamentals and infrastructure are expected to develop, Drive the marginal improvement of cement demand, superimpose the contraction of supply and maintain the high cost, so as to maintain the toughness of cement price. In the whole year, the price center may be higher than that in 2021. In the medium and long term, under the “double carbon” goal, the supply of cement production capacity tends to shrink, drive the supply and demand pattern of the industry to maintain a tight balance, and the profitability is expected to remain good. From the perspective of the company, conch, as a leader in the cement industry, focuses on East and South China, with unique regional layout and more resilient market demand. At the same time, cost control and operation efficiency have maintained the leading level in the industry for a long time, and the dividend proportion and dividend rate also have a certain attraction. We are optimistic about the company’s subsequent performance and maintain the company’s “recommended” rating.
Risk tips: 1) infrastructure and real estate investment are lower than expected, affecting the demand of the cement industry: under the pressure of real estate fundamentals, if the follow-up policy support is too small or the introduction time is too late, it will affect the real estate investment, the level and speed of commencement and repair, and then affect the scale and price performance of cement demand; Similarly, if infrastructure investment fails to play a role in stabilizing the economy in time, the demand for cement and other building materials may be released less than expected. 2) The prices of raw materials and fuels continue to rise, and the profit margin is further under pressure. At present, the coal price remains high, the power cost also rises, and the pressure on the cost side of cement production is large. If the subsequent coal and power prices continue to rise, the profit margin of the company will be further under pressure. 3) The development of aggregate, new energy and other businesses is less than expected: the company has actively expanded aggregate, stone, concrete, new energy and other businesses in recent years to promote the coordinated development with the main business and open up the future growth space. However, there are differences between the business model and cement clinker, and there are risks that the development of relevant businesses is less than expected.
