\u3000\u30 China Baoan Group Co.Ltd(000009) 35 Sichuan Shuangma Cement Co.Ltd(000935) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021 and the first quarter of 2022, the operating revenue was 1.22/280 billion yuan respectively, with a year-on-year increase of – 16.9% / + 14.8%; The net profit attributable to the parent company was RMB 990 million / 270 million respectively, with a year-on-year increase of + 11.2% / + 30.3% respectively; The net profit after deducting non recurring profit and loss was RMB 980 million / 260 million respectively, with a year-on-year increase of + 58.7% / + 28.8% respectively.
Key investment points
Private equity business continues to expand: 1) the management fee income basically meets the expectation, and the construction of intelligent platform will improve the efficiency of private equity business: in 2021, the company’s private equity business segment revenue is – 11.93% to 290 million yuan year-on-year, which is mainly the company’s private equity business management fee income, but due to the company’s private equity business management fee (cost side) in the same period + 19.9% to 120 million yuan year-on-year, As a result, the management fee income (income side) fluctuates. The increase in administrative expenses is mainly due to the company’s investment in building an intelligent investment management platform to improve the information acquisition efficiency of investment research and the digital decision-making level of raising, investment, management and return. The R & D expenses increased by + 265.6% to 34 million yuan year-on-year, and the number of R & D personnel increased to 32 (2020: 12). 2) The positive feedback of investment income and income from changes in fair value increased the total income of private equity business: in 2021, the total income of private equity business (including private equity investment management fee and performance remuneration, net income from investment and net income from changes in fair value) increased by 65.1% to 990 million yuan year-on-year. ① In 2021 and 2022q1, the investment income of the company increased by + 30.6% / + 8435% to RMB 350.0/420 million respectively year-on-year. The increase in investment income was mainly due to the profits of associated companies: the ability of the investee holding long-term equity investment to transfer funds to Sichuan Shuangma Cement Co.Ltd(000935) was not limited, and the private equity investment funds harmony Jinyu, harmony Jinhong and direct investment company harmony Huiyi were accounted by the equity method. The investment income of associates and joint ventures in 2021 and 2022q1 was + 748% / + 2985% to 340 / 150 million yuan respectively year-on-year. ② the profit and loss from changes in fair value of the company in 2021 and 2022q1 were + 30.7% / – 233.3% year-on-year respectively, with a profit of 350 million yuan / loss of 180 million yuan; In 2021, the increase of profit and loss from changes in the company’s fair value was mainly due to the increase of the company’s principal guaranteed floating income structured deposits, resulting in an increase of 5.69pct in the proportion of trading financial assets to total assets compared with the beginning of 2021; In 2022q1, this loss is mainly due to changes in financial assets of subsidiaries. 3) Long term equity investment grew steadily and the scale of private equity business expanded orderly: by the end of 2021, the proportion of long-term equity investment in the total assets of the company had increased 11pct to 50.5% compared with the beginning of 2021, and the amount of long-term equity investment reached 3.27 billion yuan, mainly due to the full conversion of Tianjin Jinyu convertible bonds held by the company and the increase in profits of associated companies.
Continuous reduction of building materials production business: the products of the company’s building materials production and manufacturing enterprises include cement, commodity clinker, aggregate, etc., which are widely used in highway, railway, airport, power station, real estate, municipal infrastructure, Rural Revitalization and other projects; However, the company’s building materials production business is gradually cleared. In 2021, the revenue of the company’s cement business segment increased from – 18.3% to 930 million yuan year-on-year, and the proportion in revenue decreased from 77.3% in 2020 to 76.0%.
Profit forecast and investment rating: we believe that Sichuan Shuangma Cement Co.Ltd(000935) ‘s building materials production business will maintain stable profits, and direct investment and private equity investment management business will become new performance growth points and usher in more than expected development. We raised the net profit attributable to the parent company from 2022 to 2023 to RMB 1.441/1.996 billion respectively, compared with the previous value of RMB 1.435/1.978 billion. We predict that the net profit attributable to the parent company in 2024 will be RMB 2.289 billion, corresponding to 9.28/6.70/5.84 times P / E respectively, maintaining the “buy” rating.
Risk tips: 1) tightening of regulatory policies related to private equity; 2) Repeated outbreaks have affected the company’s operation; 3) The macro economy is depressed, and the raising of private equity management business is less than expected; 4) The dignity of the capital market scene decreased, and the exit of the project was less than expected; 5) The cement business dragged down the company’s business.
