\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 89 Jiangxi Wannianqing Cement Co.Ltd(000789) )
Event:
Jiangxi Wannianqing Cement Co.Ltd(000789) released the annual report of 2021: in 2021, the company achieved an operating revenue of 14.205 billion yuan, a year-on-year increase of 13.37%; The net profit attributable to shareholders of listed companies was 1.593 billion yuan, a year-on-year increase of 7.61%.
Key investment points:
In 2021, the company’s operation was stable and its growth was good, and its annual performance reached a new high. The company achieved an operating revenue of 14.205 billion yuan, a year-on-year increase of 13.37%; The total profit was 3.035 billion yuan, a year-on-year increase of 6.09%; The net profit attributable to shareholders of listed companies was 1.593 billion yuan, a year-on-year increase of 7.61%. During the reporting period, the company produced 24.69 million tons of cement, a year-on-year increase of 2.45%, and achieved 24.5 million tons of cement sales, a year-on-year increase of 2%. During the reporting period, the company’s limestone for production was mainly supplied by its own mines. The company purchased bituminous coal and signed long-term cooperation agreements with a number of coal suppliers. The proportion of direct coal supply exceeded 80%. Under the guarantee of raw fuel, the cost rise of the company is controllable, and the gross profit margin and net profit margin only decline slightly, reaching 27.36% and 16.24% respectively.
Jiangxi has an excellent market pattern and continuous improvement in supply and demand. As a regional leader, the company is expected to continue to benefit. By the end of 2021, Jiangxi has a total cement clinker production capacity of about 65 million tons, with a clinker production capacity of more than 80% of Cr5. The company has a clinker production capacity of 14.86 million tons and a cement production capacity of 26 million tons, ranking the top three in Jiangxi Province. About 80% of the cement is sold in Jiangxi Province. The regional scale advantage is obvious, and the performance can grow steadily. In 2021, Jiangxi Province issued a series of policies to help the construction of major projects. From 2021 to 2023, Jiangxi Province strives to complete an investment of more than 1 trillion yuan every year, of which major infrastructure projects and new infrastructure projects strive to complete more than 200 billion yuan and 50 billion yuan respectively. The demand for cement is expected to continue to grow. The implementation of peak shifting production in Jiangxi is good. In February 2021, the Provincial Department of industry and information technology and the Department of ecological environment jointly issued a notice clearly requiring all cement clinker production lines in the province to implement peak shifting production. The kiln shutdown time throughout the year shall not be less than 55 days, and the cement supply shall be effectively restrained. During the reporting period, the company’s cement capacity utilization rate exceeded 90%, providing effective support for performance growth.
Profit forecast and investment rating: the company’s performance in 2021 will reach a new high, its profitability will be stable, and the regional pattern of Jiangxi is excellent. During the “14th five year plan” period, investment projects will drive the demand for cement. As a regional leader, the company will continue to benefit. We expect that from 2022 to 2024, the company’s revenue will be RMB 14.957 billion, RMB 16.264 billion and RMB 17.517 billion respectively, and the net profit attributable to the parent company will be RMB 1.707 billion, RMB 2.002 billion and RMB 2.24 billion respectively, corresponding to PE of 6.09, 5.19 and 4.64 times, maintaining the “overweight” rating.
Risk warning: the price of raw fuel continues to rise; Cement prices fell sharply; The demand for cement fell sharply; The progress of infrastructure investment is less than expected; The epidemic situation has repeatedly affected the construction and economy.
