\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 801 Huaxin Cement Co.Ltd(600801) )
Core view
The company issued the annual report of 2021. In 2021, the company achieved revenue of 32.464 billion yuan (+ 10.59%); The net profit attributable to the parent company is 5.364 billion yuan (- 4.74%), and the net profit not attributable to the parent company is 5.305 billion yuan (- 4.48%). In Q4 of 2021, the company achieved a revenue of 10 billion yuan (+ 11.91%), a net profit attributable to the parent company of 1.8 billion yuan (+ 12.08%), and a net profit not attributable to the parent company of 1.781 billion yuan (+ 14.63%).
The volume and price increased steadily, but the profit per ton was eroded by the sharp increase in cost. In 2021, the company’s cement sales volume was 70.14 million tons (- 1.72%), the sales revenue was 24.068 billion yuan (+ 1.84%), the operating cost was 15.925 billion yuan (+ 10.72%), the ton revenue was 343.14 yuan (+ 12.02 yuan), the ton cost was 227.04 yuan (+ 30.70 yuan), and the ton gross profit was 116.10 yuan (- 18.68 yuan). The clinker sales volume is 5.12 million tons (+ 10.34%), the sales revenue is 1.606 billion yuan (+ 22.36%), the operating cost is 1.314 billion yuan (+ 45.59%), the ton revenue is 313.74 yuan (+ 30.81 yuan), the ton cost is 256.66 yuan (+ 62.13 yuan), and the ton gross profit is 57.08 yuan (- 31.32 yuan). The sharp rise in coal prices in 2021 led to pressure on the cost side. Although the price increased, it failed to fully transmit the pressure on the cost side, and the profit per ton was weakened. In the short term, the downstream real estate is gradually improved with the policy, but the fundamentals are at the bottom stage. The cement demand will mainly benefit from the recovery of infrastructure investment, and the margin may be improved. It is predicted that the cement demand in 2022 will be generally stable, stable and declining. It is expected that the company’s cement and clinker sales will remain stable in 2022, and the profit per ton may recover and improve.
The aggregate business grew significantly, the gross profit per ton increased, and the revenue per ton of concrete decreased, but the sales volume nearly doubled, resulting in a significant increase in sales revenue. In 2021, the aggregate sales volume of the company was 34.97 million tons (+ 51.71%), the sales revenue was 2.054 billion yuan (+ 73.57%), the operating cost was 706 million yuan (+ 59.52%), the ton revenue was 58.72 yuan (+ 7.39 yuan), the ton cost was 20.19 yuan (+ 0.99 yuan), and the ton gross profit was 38.53 yuan (+ 6.41 yuan). The sales volume of concrete is 9.05 million m3 (+ 96.31%), the sales revenue is 3.175 billion yuan (+ 68.94%), the ton revenue is 350.87 yuan (- 56.84 yuan), the ton cost is 284.92 yuan (- 8.49 yuan), and the ton gross profit is 65.96 yuan (- 48.35 yuan). The increase in concrete sales is mainly due to the company’s integrated development strategy and continuous expansion of the market. The decline in ton revenue is mainly due to the company’s adoption of the strategy of low cost and low sales price to seize the market share. The competition for aggregate mines in the post cement era is particularly important for cement enterprises. The total resource reserves of Huaxin Cement Co.Ltd(600801) which have obtained the mining license have reached 3.6 billion tons. In addition, the company is steadily promoting 10 aggregate projects under construction, such as Yangxin’s 100 million ton machine-made sand project. After all the projects are put into operation, the aggregate production capacity can reach 270 million tons / year. Huaxin main camp Hubei has the advantage of low-cost logistics of the golden waterway of the Yangtze River, taking the lead in location, cost and other aspects. It is optimistic that the performance contribution of aggregate business is expected to increase steadily.
Huaxin Cement Co.Ltd(600801) “going global” strategy was accelerated, the total overseas production capacity reached 10 million tons, the conversion of B shares to H shares was completed, and the internationalization process was accelerated. On December 24, 2021, Huaxin completed the acquisition of Haorui Zambia and Malawi cement, adding 250000 T / a cement grinding capacity in Malawi, 1.5 million T / a cement capacity and Shanghai Pudong Development Bank Co.Ltd(600000) T / a aggregate capacity in Zambia; On January 8, 2022, the 2800t / d cement clinker production line project in narayani, Nepal was successfully put into operation. At present, Huaxin has achieved capacity expansion in eight countries in Central Asia, Southeast Asia and Africa. By the end of 2021, the company’s overseas cement grinding capacity has reached 10.83 million tons / year, and the overseas clinker capacity ranks second in China. In the context of “dual control of energy consumption”, China’s cement production capacity will not grow unless it is reduced. Huaxin Cement Co.Ltd(600801) actively accelerating the expansion of overseas production capacity can make up for the income impact caused by the reduction of China’s cement production capacity. It is optimistic that Huaxin’s foreign production capacity will quadruple in 2025. On March 28, 2022, the company’s H shares were listed and traded on the main board of the Hong Kong stock exchange, further promoting the development of overseas business. At the closing on March 29, 2022, Huaxin Cement Co.Ltd(600801) A shares ( Huaxin Cement Co.Ltd(600801) . SH) were priced at 17.92 yuan, while Hong Kong shares (6655. HK) were priced at 13.40 yuan. The discount of Hong Kong shares was relatively serious, about 60% of that of a shares. The corresponding dividend yield (before tax) of Hong Kong shares in 2021 was close to 9.18%, with significant investment value.
Investment suggestion: the company’s main cement business is stable, but the “cement +” businesses such as aggregate, concrete and environmental protection are developing rapidly, and the overseas business is increasing steadily. It is optimistic about the company’s continuous overweight in the above businesses, and the company’s performance is expected to grow steadily. It is estimated that from 2022 to 2024, the company’s revenue will be 36.340 billion yuan, 40.727 billion yuan and 47.569 billion yuan respectively, the net profit attributable to the parent company will be 5.944 billion yuan, 6.763 billion yuan and 8 billion yuan respectively, the corresponding PE will be 6.32, 5.56 and 4.70 times respectively, and the rating will be upgraded to “buy”.
Risk tip: infrastructure and real estate demand is lower than expected, coal prices rise sharply, aggregate business expansion is lower than expected, overseas capacity expansion is lower than expected, etc.
