\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 89 Jiangxi Wannianqing Cement Co.Ltd(000789) )
The company’s net profit attributable to the parent company in 21 years was 1.593 billion yuan, a year-on-year increase of 7.61%
The company released its annual report for 21 years. The annual revenue / net profit attributable to the parent company was 14.205/1.593 billion yuan, a year-on-year increase of 13.37% / 7.61%, and the net profit deducted from non attributable to the parent company was 1.490 billion yuan, a year-on-year increase of 7.18%. Among them, Q4 achieved a revenue of 4.57 billion yuan in a single quarter, a year-on-year increase of 23.9%, and the net profit attributable to the parent company was 464 million yuan, a year-on-year increase of 1.5%.
In the 21st year, cement sales increased steadily, and regional demand still has potential
The company achieved a sales revenue of 8.36 billion cement and clinker in 21 years, with a year-on-year increase of 12.3%, mainly driven by price growth. The sales volume was 27.69 million tons, with a year-on-year increase of 0.9%, and the average price per ton increased by 30.6 yuan to 302 yuan / ton. Affected by the rise of coal price, the cost per ton increased by 27.5 yuan to 197 yuan / ton, and finally realized a gross profit per ton of 105 yuan, with a year-on-year increase of 3 yuan / ton. The sales area of the company is mainly concentrated in Jiangxi. We believe that the cement demand in Jiangxi still has growth potential. In 2021, the province issued a series of policies to help the construction of major projects, and strive to complete the investment of more than 1 trillion yuan every year from 21 to 23 years, of which the major infrastructure projects / new infrastructure projects strive to complete more than 200 / 50 billion yuan. Under the background of steady growth, the growth rate of infrastructure investment is expected to accelerate. At the same time, Jiangxi Province proposed a total investment of 600 billion yuan in the comprehensive transportation planning and construction in the 14th five year plan, an increase of 34% over the actual investment in the 13th five year plan, further boosting the cement demand in the province.
The decline of gross profit margin and the increase of expense rate in 21 years led to the decline of net profit margin and the further improvement of capital structure
In 21 years, the company’s overall gross profit margin was 27.4%, a year-on-year decrease of 0.78pct, of which the gross profit margin in Q4 was 30.7% in a single quarter and increased by 9pct month on month. The company signed long-term cooperation agreements with a number of coal suppliers, and the direct supply of coal accounted for more than 80%, which is expected to reduce the impact of coal price fluctuations on costs. The expense rate during the period was 6.1%, with a year-on-year increase of 0.3pct, of which the sales / management / R & D / financial expense rates were – 0.2 / + 0.3 / – 0.1 / + 0.2pct respectively year-on-year. The increase in the management expense rate was mainly due to the increase in employee compensation, depreciation and asset amortization, safety and environmental protection expenditure compared with the same period last year. The increase in the financial expense rate was mainly due to the increase in the apportionment of unrecognized financing expenses and the accrued interest on convertible bonds in the current period. Finally, the net interest rate was 16.2%, a year-on-year decrease of 1.3pct, and the profitability decreased. The asset liability ratio at the end of the period was 37.5%, a year-on-year decrease of 0.8pct, and the capital structure was further optimized.
Jiangxi cement is the leader, maintaining the “buy” rating
The company is the leader of Jiangxi cement, with a cement production capacity of 26 million tons and a capacity utilization rate of more than 90%. While steadily developing the cement business, the company actively expands the industrial chain. At present, nearly 30 commercial concrete enterprises are arranged in the province, with a commercial concrete production capacity of 17 million m3 and an aggregate production capacity of 9 million tons, creating multiple profit growth points for the company. Taking into account factors such as declining demand and rising coal costs, the net profit forecast for 22-23 years was lowered to RMB 1.79/1.96 billion (previous value: RMB 2.09/2.36 billion), and the 24-year forecast was increased to RMB 2.12 billion. Referring to comparable companies, the company was approved to give the company 7 times PE for 22 years and the target price was RMB 15.68, maintaining the “buy” rating.
Risk tips: cement demand is less than expected, price rise in peak season is less than expected, coal cost rise, etc.
