\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 585 Anhui Conch Cement Company Limited(600585) )
Event overview. The company issued the 2021 annual report. In 2021, the company achieved a revenue of 167.95 billion yuan, a year-on-year increase of – 4.73%, and a net profit attributable to the parent company of 33.267 billion yuan, a year-on-year increase of – 5.38%; The corresponding Q4 revenue was 46.24 billion yuan, a year-on-year increase of – 11.48%, and the net profit attributable to the parent company was 10.88 billion yuan, a year-on-year increase of + 4.42%. The company also announced that the planned sales volume of cement and clinker in 2022 was 325 million tons (excluding trade volume), with a slight increase year-on-year, which was generally the same as the actual sales volume in 2020.
Q4 has great demand pressure, and the price and cost have increased significantly month on month. The company’s performance basically meets expectations. In 2021q4, due to energy consumption control and real estate regulation, the cement industry presents a weak pattern of supply and demand as a whole. Although the price in the early stage of Q4 increased significantly, the price also fell sharply after entering the off-season in the second half of December. In addition, the cost side coal price increased greatly, which eroded the industry profits to a certain extent. According to the data disclosed in the annual report, in 2021, the company produced and sold 304 million tons of cement and clinker, a year-on-year increase of – 6.5%. It is estimated that the selling price is 361 yuan / ton, a year-on-year increase of + 36 yuan / ton, the cost per ton is 203 yuan / ton, a year-on-year increase of + 32 yuan / ton, and the gross profit per ton is 157 yuan / ton, a year-on-year increase of + 3 yuan / ton; It is estimated that the sales volume of Q4 decreased by 27-28% year-on-year, the price increased by more than 130 yuan / ton month on month, and the gross profit per ton increased by more than 90 yuan / ton month on month.
The aggregate business has developed rapidly. In 2021, the company added 7.5 million tons of aggregate capacity through new construction and M & A, and the annual aggregate revenue was 1.82 billion yuan, with a year-on-year increase of 77.50% and a gross profit margin of 65.69%, which remained high, reflecting a good resource barrier. In the future, aggregate business is still expected to become one of the new growth points of the company.
The dividend payout rate rose to 37.9%, the second highest in history. The company plans to distribute cash dividends of 2.38 yuan (including tax) to all shareholders per share. Based on the total share capital of 5.299 billion shares as of December 31, 2021, the total amount of cash dividends to be distributed is 12.61 billion yuan (including tax). The amount of cash dividends to be distributed accounts for 37.91% of the net profit attributable to shareholders of Listed Companies in 2021, and the ratio in 2019 and 2020 is about 32%. Only 40% in 2017 in history.
Focus on supply side changes and H2 demand recovery in 2022. According to the data of the Bureau of statistics, the cement demand from January to February 2022 was – 17.8% year-on-year, reflecting that the demand for infrastructure and real estate was still weak. At the same time, the year-on-year price increase in East China, the core region of the company, was limited, and the cost pressure was high, so it was judged that the overall performance pressure of H1 company was high. However, we note that in 2022, most regions tightened the peak shifting production policy year-on-year, with a significant increase in the number of days of kiln shutdown and a decline in hedging demand. At the same time, under the pressure of steady growth, the real estate regulation is expected to gradually relax, and the demand may gradually recover from H2, and the company’s sales guidance also reflects the confidence in demand recovery to a certain extent. We believe that if the peak shifting production in 2022h1 industry is well executed, it will lay a good foundation for H2. At that time, the cement industry may show price elasticity.
Investment advice
Considering that Q1 real estate is still in the decline stage, the sales volume assumption in 2022 is lowered, the cost forecast is raised, and the income assumption of non main business (mainly including cement trade and other material trade) is lowered. However, considering that the starting point of cement price in Southwest China has been significantly higher than that in 2021, the assumption of cement price in Southwest China will be raised. The revenue forecast for 2022 / 2023 is lowered to RMB 169.26/171.91 billion (Original: RMB 1956.8/2030.4 billion), and the net profit attributable to the parent company in 2022 / 2023 is lowered to RMB 333.8/34.66 billion (Original: RMB 365.4/37.71 billion). It is estimated that the company’s revenue / net profit attributable to the parent company in 2024 will be RMB 174.17/35.78 billion, and the EPS from 2022 to 2024 will be RMB 6.30/6.54/6.75 respectively, corresponding to the closing price of RMB 36.87 on March 25, 5.85/5.64/5.46x PE. The company’s 2022 profit forecast 7x PE valuation was given, and the target price was correspondingly lowered to 44.10 yuan (Original: 51.23 yuan), maintaining the “buy” rating.
Risk tips
The demand is lower than expected, the cost is higher than expected, and there are systemic risks.
