\u3000\u30 China Baoan Group Co.Ltd(000009) 35 Sichuan Shuangma Cement Co.Ltd(000935) )
Building materials business is gradually transformed into private equity business. At the beginning of listing, the company’s main business was cement manufacturing and sales. With the gradual development of business, the company has become a listed company engaged in industrial investment and management and equity investment fund management. From 2016 to 2021, although the total operating income of the company decreased, the net profit increased significantly, mainly due to the contribution of the company’s private equity management business. In 2016, the company’s annual net profit was only 108 million yuan, while in the first three quarters of 2021, the company’s net profit reached 648 million yuan. The company’s roe (diluted) also rose from 3.11% in 2016 to 17.56% in 2020.
The policy of expanding and strengthening the private equity business continues to generate dividends. The main influencing factors of private equity fund industry include fund-raising, investment and exit. 1) Fund raising: various institutional investors have become the main force of private equity fund investment, and local governments have also vigorously promoted the development of the master fund to promote industrial upgrading, which has also injected vitality into the private equity fund industry; 2) Investment: at present, China’s economic development is generally upward, the deepening of supply side structural reform is under way, scientific and technological innovation is in the ascendant, and technological innovation and model innovation enterprises continue to appear, bringing a large number of investment opportunities to the private equity fund industry; 3) Exit: under the comprehensive registration system reform, the all-round development of the science and innovation board, the gem and the Beijing stock exchange will provide more convenient and abundant exit options for private equity investment funds.
Core competitiveness: IDG gene is rooted, with rich historical accumulation, professional investment team and brand influence. 1) The company’s investment management team is highly qualified and professional. Most of the investment business personnel come from professional investment institutions, and many of them have more than 10 years of IDG executive experience. 2) The investment management system of the company is very mature, and perfect working procedures and implementation rules have been formulated from each link of project initiation, due diligence, investment and post investment management. 3) The company can grasp the operation of the investment enterprise in real time and make targeted improvement to comprehensively enhance the value of the investment enterprise. 4) The investment management team of the company has rich experience in the capital market and is familiar with various exit ways such as listing and M & A in the capital market, so as to escort the realization of investment income to the greatest extent.
Profit forecast and investment suggestions
We predict that the company’s 20212023 EPS will be 1.03/1.85/2.72 yuan respectively. Using the segment valuation method, 1) building materials: with reference to the valuation of comparable companies, the segment is given 6.50xpe for 22 years, and the corresponding segment value is 1.403 billion yuan; 2) Private placement: with reference to the valuation of comparable companies, the segment is given 14.20xpe for 22 years, with the corresponding segment value of 17.006 billion yuan. The consolidated target value is 18.409 billion yuan, corresponding to the target price of 24.11 yuan. It is covered for the first time and given the overweight rating.
Risk tips
Macroeconomic policies and capital market fluctuations have led to the raising of private equity investment funds less than expected and fewer exit channels.
The aggregate capacity of the company’s new aggregate production line is lower than expected, and the cement business continues to shrink.
There is great uncertainty in the company’s PE management income, investment income and profit and loss from changes in fair value.
