\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 801 Huaxin Cement Co.Ltd(600801) )
Event:
The company released its annual report for 2021, and achieved an operating revenue of 32.464 billion yuan, an increase of 10.59% at the same time; The net profit attributable to the parent company was 5.364 billion yuan, with a decrease of 4.74%; Deduct the net profit not attributable to the parent company of RMB 5.305 billion, with a decrease of 4.48%. In the fourth quarter alone, the company’s revenue was 10 billion yuan, an increase of 11.91% at the same time; The net profit attributable to the parent company was 1.8 billion yuan, an increase of 12.08% at the same time; Deduct the net profit not attributable to the parent company of RMB 1.781 billion, an increase of 14.63% at the same time. The company announced the profit distribution plan for 2021, and distributed a cash dividend of 1 yuan (including tax) per share, with a cash dividend ratio of nearly 40%.
Comments:
Weak demand superimposed on rising costs, and the profit of cement business declined: in 2021h2, due to the rapid decline of real estate cycle and tepid infrastructure investment, the demand for cement decreased significantly. Affected by this, the company’s annual cement sales volume was 70.14 million tons, down 1.72% at the same time. The fuel cost accounts for the highest proportion in the production cost of cement clinker. The sharp rise in the price of raw coal makes the company’s fuel and power cost per ton of cement reach 132 yuan, an increase of 23.84% at the same time. Although benefiting from the effective constraints of the supply side of the industry, the product price can still maintain a relatively high level. In 2021, the price of cement ton is 343 yuan, an increase of 3.63% at the same time; However, the gross profit per ton still decreased by 19 yuan to 116 yuan compared with the same period of the previous year.
The contraction of supply led to the rise of regional market prices, and the performance of single Q4 exceeded expectations: in the fourth quarter alone, the company’s operating revenue and net profit attributable to the parent company both achieved double-digit growth. We believe that it mainly benefited from the power and production restriction in some regional markets, which significantly raised the cement price and improved the profitability. For example, in the fourth quarter of 2021, the average price of cement in Southwest China reached 609 yuan / ton, an increase of 62% year-on-year.
The “cement +” business has gradually developed to ensure the achievement of the “milestone” plan: by the end of 2021, the company has a cement production capacity of 116 million tons / year (grinding capacity, including the capacity of associated enterprises), which is basically the same as that of the previous year; The aggregate production capacity is 154 million tons / year, an increase of 180% at the same time; The production capacity of commercial concrete is 43.8 million m3 / year, an increase of 62% at the same time; The production capacity of comprehensive environmental protection wall materials is 540 million pieces / year, an increase of 50% at the same time. Although the company’s cement business is still the absolute main business, accounting for 79% of the revenue, the non cement business has gained more resources, and the proportion is steadily increasing. In particular, the aggregate business has developed rapidly, with a sales of 34.97 million tons in 21 years, an increase of 52% at the same time, and the sales gross profit margin is as high as 66%, accounting for 12% of the gross profit of the main business. The company is still building 10 aggregate projects. After all of them are put into operation, the production capacity will reach 270 million tons / year. At the same time, we also note that in 2021, the company added 1.49 billion tons of resources, and the total resource reserves with mining licenses reached 3.6 billion tons. The aggregate business is expected to become an important driving force for the company’s growth in the future and an important guarantee for the company’s “milestone” development strategic plan (the performance in 2025 will double that in 2019).
Under the expectation of “steady growth”, there is still room for valuation repair in the cement sector: in 2022, the cement demand is still relatively weak, and the national output fell 17.8% year-on-year from January to February. 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, which is expected to remain in the platform period throughout the year.
Profit forecast, valuation and rating: considering the rapid development of the company’s aggregate and other businesses, we raised the company’s EPS from 22 to 23 years to 2.86 and 3.36 yuan (7.92% and 10.89% respectively), and increased the company’s EPS for 24 years to 3.98 yuan. In the medium and long term, the company’s “cement +” business scale continues to expand, there is still broad room for performance improvement, and continues to maintain the “buy” rating.
Risk warning: the growth rate of fixed investment, real estate investment and infrastructure construction is at risk of decline; Price fluctuation risk of raw materials and coal; Price downside risk; Exchange loss risk; New business expansion is less than expected risk, etc.
