\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 585 Anhui Conch Cement Company Limited(600585) )
Event: the company released its annual report for 2021, and achieved an annual operating revenue of 167953 billion yuan, a decrease of 4.73% at the same time; The net profit attributable to the parent company was 33.267 billion yuan, with a decrease of 5.38%; Deduct the net profit not attributable to the parent company of RMB 31.375 billion, with a decrease of 5.41%. In the fourth quarter alone, the company’s revenue was 46.442 billion yuan, a decrease of 11.48%; The net profit attributable to the parent company was 10.877 billion yuan, an increase of 4.42% at the same time; Deduct the net profit not attributable to the parent company of RMB 10.316 billion, an increase of 5.72% at the same time. The company announced the profit distribution plan for 2021, and distributed a cash dividend of 2.38 yuan (including tax) per share, with a cash dividend ratio of 37.91%.
The weak demand led to the decline of sales volume, and the gross profit per ton of products continued to increase: in 2021h2, due to the rapid decline of the real estate cycle and the tepid infrastructure investment, the cement demand gradually declined, and the national cement output decreased by 1.2% to 2.363 billion tons in 2021. Affected by weak demand, the sales volume of cement clinker (self-produced products) of the company was 304 million tons, down 6.53% at the same time. The sharp rise in the price of raw coal made the fuel and power cost per ton of cement clinker (self product) of the company reach 112.74 yuan, an increase of 29.98% at the same time. However, benefiting from the effective constraints on the supply side of industries such as power and production restriction and peak shifting production, the price of the company’s products further increased. In 2021, the price of cement clinker (self-produced products) per ton was 367 yuan, an increase of 11.68% at the same time; The gross profit per ton was 161 yuan, an increase of 5 yuan over the same period last year. In the fourth quarter alone, Anhui Conch Cement Company Limited(600585) operating revenue declined significantly, while the profit increased year-on-year while the cost was still high. We believe that it is mainly due to the change of product structure, that is, the scale of trade business (gross profit margin of 0.21% in 2021) has shrunk.
Seek progress while maintaining stability and actively expand diversified businesses: during the reporting period, the company actively promoted the construction and M & A of projects outside China in the main cement industry, accelerated the extension of upstream and downstream industrial chains (such as aggregate and concrete), and began to develop to emerging industries such as new energy and smart logistics, in order to create a new revenue growth pole. By the end of 2021, the company has a clinker production capacity of 269 million tons (increased by 7.2 million tons in 21 years), a cement production capacity of 384 million tons (increased by 14.25 million tons in 21 years), an aggregate production capacity of 65.8 million tons (increased by 7.5 million tons in 21 years), a commercial concrete production capacity of 14.7 million cubic meters (increased by 10.5 million cubic meters in 21 years), and a photovoltaic power generation installed capacity of 200MW (completed the equity acquisition of conch new energy in 21 years, and added 19 photovoltaic power stations and 3 energy storage power stations).
Under the background of “steady growth”, cement demand will still be well supported: in 2022, cement demand is still relatively weak, and the output from January to February decreased by 17.8% year-on-year. However, the current cement price remains high. On the one hand, it is supported by the cost side, and on the other hand, the implementation of staggered peak production is better. We believe that with the steady growth policy, the infrastructure side still has strong support for cement demand. Even if the real estate side has certain pressure, the annual demand is expected to remain in the platform period.
Profit forecast and valuation rating: considering that the cost increase can be passed on by price rise, we raised the company’s EPS from 22 to 23 years to 6.43 and 6.56 yuan (the increase ranges are 3.21% and 1.71% respectively). The newly added 24-year EPS is 6.85 yuan, maintaining the “buy” rating for both A-Shares and H shares of the company.
Risk warning: the risk of demand falling short of expectations, the risk of deterioration of the supply and demand pattern of the industry, the risk of continued sharp rise in the price of raw and fuel materials, the risk of overseas investment uncertainty and exchange gains and losses, etc