\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 801 Huaxin Cement Co.Ltd(600801) )
Key investment points
Event: the company disclosed that in the first quarter report of 2022, Q1 achieved a total operating revenue of 6.531 billion yuan, a year-on-year increase of + 5.5%, and a net profit attributable to the parent company of 672 million yuan, a year-on-year increase of – 8.5%, slightly exceeding our expectations.
Q1 revenue was + 5.5% year-on-year, and the gross profit margin was -4.1pct year-on-year with the same caliber. It is expected that the price of cement business volume will rise, but the cost will be under pressure, while the growth of concrete and aggregate will contribute to the increment. (1) In 2022, the national cement output in Q1 was – 12.1%, but the average price including tax of high-standard cement was + 69 yuan / ton year-on-year. The market trend of two lakes and southwest China with concentrated production capacity of the company was basically consistent with that of the whole country. In addition, it is expected that the aggregate sales volume of Q1 and 2022 will increase significantly year-on-year. (2) The gross profit margin of Q1 was 26.3%, with a year-on-year decrease of – 4.1pct in the same caliber. The decrease was mainly due to the impact of the sharp rise of coal price per ton and the impact of the increase of average price per ton on the denominator.
The cost side has been compressed, and the cost rate has decreased slightly during the period. During Q1, the expense rate of the company decreased by 0.5pct to 11.6% year-on-year, of which the sales / management / R & D / financial expense rate was – 0.1 / – 0.8 / + 0.0 / + 0.3pct year-on-year respectively. The increase in financial expenses was mainly due to the increase in exchange losses.
Operating cash flow declined, capital expenditure increased rapidly, and the debt ratio increased slightly. The net cash flow from Q1 operating activities of the company was – 210.9% to – 319 million yuan year-on-year. In addition to the decline in profits, it is expected to be related to the slight decline in cash to cash ratio, the sharp rise in fuel prices and the increase in cash paid for goods. Q1 cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets was 1.639 billion yuan, a year-on-year increase of + 84.5%, mainly due to the increase in investment in aggregate and concrete projects, reflecting the accelerated expansion of industrial chain extension, which will support the high growth of aggregate and concrete. The company’s asset liability ratio in the first quarterly report of 2022 was 43.2%, with a year-on-year increase of + 3.2pct. The balance of interest bearing debt was 10.902 billion yuan, with a year-on-year increase of + 2.847 billion yuan and a month on month increase of + 636 million yuan compared with the annual report of 2021, mainly due to the increase of long-term loans.
The profit of cement business is expected to rebound at a low level, and the integrated expansion of industrial chain is expected to accelerate, which is expected to continue to contribute to the performance increment. Infrastructure development began to transmit to the physical demand for building materials. Recently, the central financial and Economic Commission meeting studied comprehensively strengthening infrastructure, reflecting that infrastructure will continue to develop. It is expected that there is still room for obvious improvement in the follow-up infrastructure demand. The restriction of the epidemic situation on the construction rhythm is expected to make the demand more concentrated in the third and fourth quarters. It is expected that with the mitigation of the epidemic situation, the Eastern Hubei market is expected to benefit from the price elasticity of the cement market along the river, and the strengthening of peak shifting self-discipline in the southwest will also lead to the recovery of prosperity. The profit of cement business is expected to rise at a low level in 2022, and the year-on-year growth rate of quarterly profit is expected to continue to rise. The aggregate and concrete business benefited from the release of production capacity in the early stage and the acceleration of the integrated expansion of the industrial chain. The planned sales volume of the two products of the company in 2022 increased by 100% and 124% respectively year-on-year, which will contribute to considerable performance increment.
Profit forecast and investment rating: we maintain the forecast of the company’s net profit attributable to the parent company from 2022 to 2024, which are 5.90 billion yuan, 6.70 billion yuan and 7.23 billion yuan respectively, corresponding to EPS of 2.82/3.20/3.45 yuan from 2022 to 2024, and the current market value corresponds to PE of 7.8/6.8/6.3 times p / E ratio from 2022 to 2024, maintaining the rating of “overweight”.
Risk warning: the real estate credit risk is out of control, the epidemic situation exceeds expectations, and the competition and cooperation attitude of the industry deteriorates.
