\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 801 Huaxin Cement Co.Ltd(600801) )
Event: Huaxin Cement Co.Ltd(600801) released the annual report of 2021. In 2021, the company achieved a revenue of 32.46 billion yuan, a year-on-year increase of + 10.6%; The net profit attributable to the parent company was 5.36 billion yuan, a year-on-year increase of – 4.7%; Deduct the net profit not attributable to the parent company of RMB 5.3 billion, a year-on-year increase of – 4.5%; The net cash flow from operating activities was 7.59 billion yuan, a year-on-year increase of – 9.6%. The operating revenue in the fourth quarter was 10.01 billion yuan, a year-on-year increase of + 11.9%; The net profit attributable to the parent company was 1.8 billion yuan, a year-on-year increase of + 12.1%; Deducting the net profit not attributable to the parent company was 1.78 billion yuan, a year-on-year increase of + 14.6%.
Revenue side: the ton price of cement clinker increased year-on-year, and the rapid development of non cement business contributed to the increment.
In terms of sales volume: the company’s cement clinker sales volume was 75.27 million tons in 21 years, with a year-on-year increase of – 1.0%. In the second half of the year, due to the dual control of energy consumption and the slowdown of project commencement, the sales volume decreased significantly, and we expect Q4 to decline more. In terms of regions, Hubei and East China have increased significantly, and their income has increased significantly; The price increase in the main production areas of Yunnan and Hunan could not affect the impulse reduction, resulting in a decline in income; In addition, overseas revenue increased by + 36.7% year-on-year. In terms of non cement business, the aggregate sales volume was 34.97 million tons, with a year-on-year increase of + 51.7%, the total disposal volume of environmental protection business was 3.28 million tons, with a year-on-year increase of + 11.6%, and the concrete sales volume was 9.05 million m3, with a year-on-year increase of + 96.5%. The revenue of aggregate and concrete business accounted for 6.3% and 9.8% respectively, with a year-on-year increase of + 2.3pct and + 3.4pct. The contribution of the company’s non cement business to the company’s. In 2022, the company plans to sell 74.46 million tons of cement clinker, a year-on-year increase of – 1.1%, 18.07 million cubic meters of concrete, a year-on-year increase of + 99.7%, 78.22 million tons of aggregate, a year-on-year increase of + 123.7%, and 3.94 million tons of environmental protection disposal, a year-on-year increase of + 20.1%; In addition, the company plans to invest 12.2 billion in the integrated business of aggregate and overseas cement, which is expected to help the smooth realization of the business plan objectives.
In terms of price: in 21 years, the company’s cement clinker price per ton was 341.1 yuan / ton, with a year-on-year increase of + 12.9 yuan. The power and production restriction brought by the dual control of energy consumption in September led to a sharp contraction in supply and promoted the rapid rise of price in the short term. Although the subsequent supply contraction was alleviated, the Q4 price was still significantly high, which promoted the year-on-year increase of price in the whole year. As of March 25, 2012, the national average price of cement was 507 yuan / ton (Mom – 7 yuan, yoy + 64 yuan). Although the demand start-up slowed down due to the recent epidemic control, the demand remained high throughout the year and the willingness of supply coordination was stronger. In addition, the coal price still rose (the market price of power end coal reached 1434 yuan / ton on March 29, with a year-on-year increase of more than 100%), and the cement price center in 22 years is expected to remain high in recent years.
Profit side: the performance contribution of non cement business is increased, and the cost control is effective.
Cost per ton & gross profit per ton: in 21 years, the cost per ton of cement clinker of the company was 229 yuan / ton, with a year-on-year increase of + 32.8 yuan, and the gross profit per ton was 112.1 yuan / ton, with a year-on-year increase of – 19.9 yuan. Affected by the sharp rise of coal price, the cost per ton increased significantly, and the increase was higher than the price, resulting in a decline in gross profit per ton. We estimate that the cost per ton of cement clinker of the company increased year-on-year in the fourth quarter of a single year, but the benefit price remained high and the coal price decreased, which promoted the significant increase of the cost per ton. In addition, the gross profit of the company’s non cement business increased rapidly and gradually contributed to the performance. In 21 years, the gross profit of aggregate and concrete reached 17.6%, with a year-on-year increase of + 6.9pct. In the 22nd year, the company plans to optimize energy consumption indicators through AFR collaborative utilization, reduce procurement costs through centralized mining, and increase the proportion of collaborative utilization of alternative fuels (the overall calorific value substitution rate in the 22nd year is planned to reach more than 10%), continue to reduce the cost pressure caused by the rise of coal price, and the gross profit per ton is expected to continue to improve when the price remains high.
Ton cost & net profit per ton: the ton cost of the company in 2021 was 50.6 yuan / ton, a year-on-year increase of -0.7 yuan (retroactive adjustment). During the 21-year period, the expense rate was 9.9%, which was -1.7pct year-on-year after adjustment according to the new accounting policy (retroactive adjustment). In terms of splitting, the sales expense rate, management expense rate, R & D expense rate and financial expense rate were – 0.8% (retroactive adjustment), – 0.4%, + 0.03% and – 0.5% respectively year-on-year. During the reporting period, the company’s expense control was effective, which contributed to the decrease of sales and management expense rate, the decrease of exchange loss and the increase of deposit interest income contributed to the decrease of financial expenses year-on-year. In 2021, the company’s net profit attributable to the parent company was 71.3 yuan / ton, a year-on-year increase of -2.8 yuan.
Investment suggestion: the company’s main cement business is located in the central and southwest regions. The supply and demand toughness of the two lakes regions is strong, and there is marginal room for improvement in the southwest region. At the same time, the company’s overseas cement clinker production capacity continues to expand, and the rapid development of aggregate, commercial mixing, environmental protection, new materials and other businesses will bring new profit growth points. Combined with the company’s milestone long-term development plan and the goal of “double development”, we are optimistic that the company will maintain growth in the next few years under equity incentive and expansion of capital expenditure. The demand is expected to decline slightly in 22 years, but it is still in a high platform period. However, under the contraction of demand, the coordination of enterprises on the supply side in order to maintain steady development is expected to be strengthened. At present, leading enterprises actively cross shareholding to jointly promote the optimization of the industry pattern, and the cost pressure supports or promotes the price to continue to maintain a high level, and the profit is expected to continue to repair. The dividend rate of the company is about 40% in recent years and 5.2% in 2021. At present, it is at a low valuation. As a leader in the industry, the company has strong defensive attributes.
Profit forecast: considering the current supply and demand of the cement industry and the cement price / cost, we adjusted and updated the profit forecast. It is estimated that the net profit attributable to the parent company in 20222023 will be 6.24 billion yuan and 7.13 billion yuan respectively (the previous forecast was 7.01 billion yuan and 8.27 billion yuan respectively; the current share price corresponding to PE is 7 and 6 times respectively, maintaining the “buy” rating.
Risk warning: macro demand is less than expected; Supply increased more than expected; Risk of delay in the construction of new production lines; Costs have risen sharply.
