\u3000\u3000 Sichuan Shuangma Cement Co.Ltd(000935) (000935)
Key investment points
Building materials production + private equity, fundamentals improved and expected to exceed expectations. Sichuan Shuangma Cement Co.Ltd(000935) was established in 1998 and listed on the main board of Shenzhen Stock Exchange in 1999. The company’s main business is building materials production and private equity investment management. Private equity investment management business is gradually entering the investment return period, which is expected to drive the fundamentals to improve or even exceed expectations. 1) Increase investment and reduce building materials: the company gradually increases its main business of private equity investment management, shifts its strategic focus, divests its subsidiary of building materials production business and reduces cement production capacity; 2) Shareholder background plus investment strength: the actual controller of the company is the core figure of IDG, with strong private equity investment strength; 3) The overall profit is stable and expected to exceed expectations: the profit of building materials production business is stable, and the revenue of private equity business is expected to exceed expectations.
The capital market welcomes the good, and the company has outstanding strength to help the private equity business. China has accelerated the establishment of a multi-level capital market, capital market policies have been released frequently, which is conducive to the venture capital industry, the development environment of the private equity industry has been continuously optimized, and wealth management has ushered in a good product driven era. 1) The development environment of private equity will be continuously optimized: Recently, the central bank and other departments jointly issued relevant plans to build a financial center in Chengdu and Chongqing. The CSRC has repeatedly said that it will promote the development of private equity and venture capital funds; 2) Favorable policies directly attack the exit pain point and enhance the attraction of fund-raising: the market supporting service institutions are constantly improved, private equity ushers in development opportunities, and the exit pain point will be effectively solved to enhance the attraction of fund-raising in the primary market. 3) The expansion of wealth management market and the rapid development of private equity management scale: as of November 2021, the management scale of China’s private equity funds has reached 19.73 trillion yuan (an increase of about 4 trillion yuan compared with the end of November 2020). With the frequent favorable epidemic control and policies, China’s private equity investment funds will usher in better development opportunities.
The core team has strong background and outstanding fund-raising + investment + management ability, forming a moat. Sichuan Shuangma Cement Co.Ltd(000935) mainly provides private equity fund management services through its subsidiaries. 1) The profit model of private equity is mainly management fee + excess return share, and the management scale and rate of return are the core influencing factors. Different subsidiaries of Sichuan Shuangma Cement Co.Ltd(000935) perform their respective duties, assume the roles of manager, GP and LP, hold different proportions of private equity fund shares, and obtain management fees, performance remuneration and excess returns. 2) The company has outstanding strength: it has advantages in fund-raising ability, investment ability and management ability. The company’s core team has rich experience, IDG background shareholders bring congenital fund-raising advantages and investment team advantages, and the company has a professional management team and a standardized and rigorous investment management system. 3) The invested projects are gradually entering the exit period. We expect that new funds will be raised in the future, which is worthy of attention. We expect that the company’s private equity investment business will gradually enter the exit stage from the investment stage, and the revenue of private equity investment business will be increased by a single fixed management fee income.
Profit forecast and investment rating: we expect the private equity management business to exceed expectations and give a “buy” rating for the first time. 1) We believe that the building materials production business of Sichuan Shuangma Cement Co.Ltd(000935) will maintain stable profits, and the private equity investment management business will become a new performance growth point and usher in more than expected development. 2) We respectively give the net profit of private equity business of RMB 1.18 billion and the net profit attributable to the parent of building materials production business of RMB 290 million in 2022. 3) We predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.052/14.35/1.978 billion respectively, corresponding to 18.74/13.74/9.96 times P / E respectively.
Risk tips: 1) tightening of regulatory policies related to private equity business; 2) The company’s operation is affected by the repeated epidemic situation; 3) The macro-economy is depressed, and the raising of private equity management business is less than expected; 4) The capital market scene has declined, and the project exit is less than expected; 5) The cement business dragged down the company’s business.
