\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 801 Huaxin Cement Co.Ltd(600801) )
Event: Huaxin Cement Co.Ltd(600801) released the first quarterly report of 2022. Q1 company achieved a revenue of 6.53 billion yuan, a year-on-year increase of + 5.5%; The net profit attributable to the parent company was 670 million yuan, a year-on-year increase of – 8.5%; Deduct the net profit not attributable to the parent company of 650 million yuan, a year-on-year increase of – 10.6%; The net cash flow from operating activities was – 320 million yuan, up from 290 million yuan in the same period last year.
The main business volume of cement decreased and the price increased, and the rapid and large-scale non cement business promoted the growth of revenue. During the reporting period, the downstream construction was insufficient and the epidemic situation repeatedly restrained the market demand. We calculated that the cement clinker sales volume of 22q1 company was about – 17% year-on-year; The price continues the year-on-year high trend since 21q4. The ton price of cement clinker is expected to be about 350 yuan, which is significantly increased year-on-year. With the decrease in volume and increase in price, we calculate that the income of cement clinker decreased slightly year-on-year. We believe that the driving force for the company to achieve year-on-year increase in revenue during the demand pressure period of the cement industry in the reporting period is the rapid growth of non cement business supported by capacity expansion. We expect that the aggregate business volume and price of 22q1 company will rise together, driving the aggregate sales revenue to increase by about 50%; The concrete business is expected to increase in volume and decrease in price driven by the integrated development, and the sales revenue will increase by more than 50%. It is expected that the company’s non cement business will account for more than 20% in the reporting period, with a significant increase year-on-year.
The rise of coal price caused a slight decline in gross profit per ton, which is optimistic about the continuous repair of follow-up performance. During the reporting period, the year-on-year rise in coal prices exacerbated the cost pressure (the price of 22q1 power coal industry was 1173.5 yuan / ton, year-on-year + 63.1%). We calculated that the cost per ton of cement clinker of 22q1 company was about 270 yuan / ton, which increased significantly year-on-year, and the price increase failed to cover the cost pressure, resulting in a year-on-year decline in gross profit per ton. We estimate that the cost per ton of 22q1 cement clinker is about 65 yuan / ton, which has increased year-on-year, mainly due to the increase in cost sharing per ton after the year-on-year decline in sales volume; The net profit attributable to the parent company of 22q1 tons is about 50 yuan / ton, a slight increase over the same period. The company has the ability of centralized mining to reduce coal costs, and the energy consumption control technology is leading in the industry. Under the condition that the price center remains high and the coal price is gradually stable, the company’s performance is expected to continue to repair.
Investment suggestion: the company’s main cement business is located in the central and southwest regions. The supply and demand toughness of the two lakes regions is strong, and there is marginal room for improvement in the southwest region. At the same time, the company’s overseas cement clinker production capacity continues to expand, and the rapid development of aggregate, commercial mixing, environmental protection, new materials and other businesses will bring new profit growth points. Combined with the company’s milestone long-term development plan and the goal of “double development”, we are optimistic that the company will maintain growth in the next few years under equity incentive and expansion of capital expenditure. The demand is expected to decline slightly in 22 years, but it is still in a high platform period. However, under the contraction of demand, the supply side coordination of enterprises in order to maintain steady development is expected to be strengthened. At present, leading enterprises actively cross shareholding to jointly promote the optimization of the industry pattern, and the cost pressure supports or promotes the price to continue to maintain a high level. Many risk factors such as downward short-term demand, repeated outbreaks and rising coal prices have been fully released. Driven by the rapid development of non cement business, the follow-up company’s performance is expected to continue to repair. The dividend rate of the company is about 40% in recent years and 5.2% in 2021. At present, the valuation is at a low level. When the market uncertainty is high, the configuration defense attribute is strong, and when the market turns better, it has upward elasticity of valuation.
Profit forecast: we estimate that the net profit attributable to the parent company from 2022 to 2023 will be 6.24 billion yuan and 7.13 billion yuan respectively, and the corresponding PE of the current stock price will be 7 and 6 times respectively, maintaining the “buy” rating.
Risk warning: the demand is less than expected; Supply increased more than expected; Risk of delay in the construction of new production lines; Costs have risen sharply.
