\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 801 Huaxin Cement Co.Ltd(600801) )
Event:
Huaxin Cement Co.Ltd(600801) released the 2021 annual report: the company achieved an annual 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%
Key investment points:
The revenue grew against the trend and the profit was basically stable. In 2021, when the cement demand was relatively slow and the epidemic affected the construction progress, the company achieved a rebound from the low annual sales in 2019 and continued the upward trend of annual sales in 2020. Under the condition of basically stable cement production and sales, the company achieved an annual operating revenue of 32.464 billion yuan, an increase of 10.59% at the same time. During the reporting period, China’s coal prices rose significantly, which put some pressure on the company’s profits. The net profit attributable to the parent company was 5.364 billion yuan in the whole year, a decrease of 4.74%. Affected by the rising cost, the company’s gross profit margin in 2021 was 34.1%, still maintaining a high level of more than 30%.
Strengthen industrial chain extension investment and overseas investment, and continuously expand the scale of production capacity. On June 10, 2021, the company acquired 100% equity of Lafarge Zambia PLC and Lafarge cement malawiltd. On November 30, 2021, all parties to the transaction completed the delivery agreed in the share acquisition agreement. After the equity acquisition, the company will increase its cement production capacity of 1.5 million tons / year and aggregate production capacity of Shanghai Pudong Development Bank Co.Ltd(600000) tons / year in Zambia. Meanwhile, the company’s cement clinker production line project in Nepal was put into operation in January 2022.
The transfer from B to h has been successfully completed, and the company’s capital operation under the a + H structure is more flexible and efficient, which is expected to further improve its competitiveness. After more than a year of promotion, 735 million domestic listed foreign shares (B shares) of the company were officially converted to the place of listing on March 28, 2022, and were listed and traded on the main board of the stock exchange of Hong Kong Limited in the form of introduction. After the implementation of the B to h scheme, it will promote the company to further improve the corporate governance structure and accelerate the internationalization process, which will help the company improve the operation level of overseas capital and make full use of overseas capital resources and market incentives to further strengthen its competitiveness.
Profit forecast and investment rating: the market pattern of central China where the company is located is stable. The company is the leader in the region, has the advantages of scale and technology to improve energy efficiency, and expands production capacity through equity investment at home and abroad. We estimate that the company’s revenue from 2022 to 2024 will be 31.888 billion yuan, 35.204 billion yuan and 39.94 billion yuan respectively, and the net profit attributable to the parent company will be 5.534 billion yuan, 6.296 billion yuan and 7.231 billion yuan respectively, with the corresponding PE of 6.79, 5.97 and 5.20 times respectively. The company will be given the “overweight” rating for the first time.
Risk tip: coal prices continue to rise; Cement prices fell sharply; Shrinking demand for cement; The investment in infrastructure projects is less than expected; The negative impact of the epidemic on the sustained economy exceeded expectations; There are certain risks in overseas M & A.
