\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 585 Anhui Conch Cement Company Limited(600585) )
Event: Anhui Conch Cement Company Limited(600585) released the first quarterly report of 2022. During the reporting period, the company achieved a revenue of 25.46 billion yuan, a year-on-year increase of – 26.1%; The net profit attributable to the parent company was 4.93 billion yuan, a year-on-year increase of – 15.2%; Deduct the net profit not attributable to the parent company of RMB 4.57 billion, a year-on-year increase of – 16.2%; The net cash flow from operating activities was 2.87 billion yuan, a year-on-year increase of – 42.0%.
Q1 volume decreased and prices increased, and the trade volume decreased significantly, which may be the main reason for the obvious decline of income. In terms of sales volume, 22q1 is affected by factors such as declining demand and repeated epidemic. We expect the sales volume of self-produced cement clinker to be about – 15% year-on-year. In terms of price, benefiting from the fact that the national cement price is still high year-on-year (at the end of March, the national average price of cement is 507 yuan / ton, year-on-year + 65 yuan). We expect the price of cement clinker produced by the company per ton to be about 370 yuan, year-on-year + 50 yuan. We estimate that the sales revenue of the company’s self-produced cement clinker is about – 4% year-on-year, far lower than the decline of – 26.1% of the overall revenue, which may be due to the significant reduction of the company’s trade business during the reporting period. Although the recent epidemic control has delayed the start of demand, although the peak season is late, it is expected that the project will be implemented gradually in the future. The demand will remain high throughout the year, and the platform + supply coordination will be stronger. In addition, the coal price is still high. It is expected that the cement price center in 22 years will still be at a high level in recent years.
The profit per ton remains stable, and the performance is expected to gradually build the bottom and repair. We expect that the cost of 22q1 self-produced cement clinker per ton of the company is close to 240 yuan / ton, with a year-on-year increase of about + 50 yuan, mainly due to the sharp rise in coal prices during the reporting period (the price of 22q1 power coal industry reached 1173 yuan / ton, with a year-on-year increase of + 63.1%). However, the benefit price increased year-on-year to hedge the cost pressure. It is expected that the gross profit per ton of cement clinker produced by the company in the reporting period will be about 130 yuan / ton, which is flat year-on-year. We estimate that the cost per ton of self-produced cement clinker in 22q1 is about 35 yuan / ton, which is slightly higher than that in the same period. The net profit attributable to the parent company per ton is about 85 yuan / ton, with little change year-on-year. During the reporting period, the company’s profitability per ton remained stable, but its performance decreased year-on-year due to the decline of sales volume. We believe that the impact of falling demand, repeated epidemics and rising coal prices has been fully released in Q1. It is expected that the company’s performance has gradually bottomed out. In the follow-up, when the price center remains high and the high coal price drops, the company’s performance is expected to gradually repair and achieve growth.
Future highlights:
In the short term, the repeated epidemic has delayed the start of demand, but the follow-up infrastructure is expected to increase efforts to reduce the impact of epidemic factors. The annual demand is expected to decline slightly, 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, the company and Xinjiang Tianshan Cement Co.Ltd(000877) , Tangshan Jidong Cement Co.Ltd(000401) , Gansu Shangfeng Cement Co.Ltd(000672) and other enterprises are actively cross holding shares, and leading enterprises are playing a leading and exemplary role together, It is expected to work together to promote pattern optimization. In addition, under the support of cost pressure, or promote the price to continue to maintain a high level, optimistic about the continuous repair of short-term profits.
In the medium term, the increase of ship freight rate, the restriction of clinker import and the establishment of northeast South mechanism all reduce the market impact; Abundant cash flow and large capital expenditure are conducive to the company’s steady expansion of the global market, making every effort to build a new growth pole such as aggregate, commercial concrete, prefabricated construction and new energy, and constantly expand new business fields, so as to open up secondary growth space.
In the long run, the normalization of dual control of energy consumption has helped optimize the industrial structure, and the replacement proportion and indicators have been further tightened under the new industrial replacement regulations; Under the dual carbon policy, as a leading enterprise, the company has its own advantages in carbon emission reduction technology, and its layout in new energy fields such as photovoltaic power stations and energy storage is expected to continue to reduce the proportion of purchased electricity, with strong cost control ability; With the continuous merger and reorganization of enterprises in the industry and the improvement of market concentration, the price competition will be gradually replaced by competition and cooperation in the future. As a leading enterprise, the company has stronger pricing power.
It is suggested that investors should look at and grow from the perspective of the internal value of the company Anhui Conch Cement Company Limited(600585) has entered the stage of net assets pushing up the market value. In recent years, the company has abundant cash flow and continuously improved the dividend rate, which has increased to 5.9% in 21 years. In this position, we suggest investors pay attention to the “long-term” investment opportunities of the company: for the restoration of overly pessimistic expectations, if the actual downstream demand exceeds the expectation, we believe that the profitability toughness of the leading conch is expected to exceed the expectation; At present, the valuation of the sector is at a low level, and the company, as an industry leader, has strong defensive attributes.
Profit forecast: we expect the net profit attributable to the parent company in 2022 and 2023 to be 36.05 billion yuan and 36.64 billion yuan respectively, and the corresponding PE of the current stock price is 6 and 6 times respectively, maintaining the “buy” rating.
Less than expected risk prompt; Supply side constraints are less than expected; Energy consumption double control and production restriction exceeded expectations; Raw materials rose more than expected; The price of cement fluctuates greatly.
