\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 77 Xinjiang Tianshan Cement Co.Ltd(000877) )
Event:
In 2022q1, the company achieved a revenue of 28.257 billion yuan, a year-on-year increase of – 1.77%, and a net profit attributable to the parent company of 1.023 billion yuan, a year-on-year increase of – 23.39%; The net profit deducted from non parent company was 903 million yuan, with a year-on-year increase of 115145%. The gross profit margin of the company’s sales was 18.85%, a year-on-year -14.47pct, and the net profit margin of sales was 4.06%, a year-on-year -8.34pct.
Ningxia Building Materials Group Co.Ltd(600449) recently announced that it plans to issue A-share shares to all shareholders of CSCEC information to absorb and merge CSCEC information, and plans to sell the control of its cement and other related businesses to Xinjiang Tianshan Cement Co.Ltd(000877) company.
Comments:
(1) the sales volume is under pressure, and the price rises at the same time. Affected by the epidemic, shipments in East and South China are under pressure (in 2021, the income in the East accounted for 42%, and that in central and South China accounted for 20%). In addition, the downstream real estate demand is weak, and the pressure on cement demand continues. Referring to the performance of the industry, in terms of output, the cumulative output of cement in China in the first quarter was 387 million tons, a year-on-year increase of – 12.1%; Among them, the monthly output in March was 187 million tons, with a year-on-year decrease of – 5.6%, but the decline was 5.7 PCT narrower than that from January to February. In terms of price, the average price of Q1 high-standard cement in East China, Northwest China, Central South China and South China was 526, 524, 511 and 514 yuan / ton respectively, with a year-on-year increase of about 42, 82, 21 and 28 yuan / ton. The price still increased year-on-year. We expect it to be related to cost support (year-on-year increase of coal price) and peak staggering / maintenance in place.
(2) in terms of cost, the period expense rate was 12.40%, with a year-on-year rate of -2.11pct. Among them, the sales expense rate was 1.46%, with a year-on-year increase of -0.83pct, mainly due to the decline in the sales scale of Q1 cement commercial mixture and the decrease in sales expenses due to the impact of the epidemic; The management expense ratio was 6.48%, with a year-on-year increase of -0.76pct; The R & D expense rate was 0.62%, with a year-on-year increase of + 0.28pct, mainly due to increased R & D investment; The financial expense rate was 3.84%, with a year-on-year increase of -0.46pct.
(3) in terms of cash flow, the net cash flow from operating activities was -1.639 billion yuan, with a year-on-year increase of – 140.66%, mainly due to the year-on-year decrease in cash received from the sale of goods and the provision of labor services; The net cash flow from financing activities was 10.853 billion yuan, a year-on-year increase of + 101.13%, mainly due to the funds raised by the company’s non-public offering of shares and the investment absorbed by its subsidiaries. The asset liability ratio was 67.46%, down from -0.5pct at the end of 2021; Short term borrowings were 29.358 billion, an increase of 4.813 billion over the end of 2021; Long term borrowings amounted to 32.602 billion, a decrease of 1.104 billion over the end of 2021.
(4) “new Tianshan” set sail in 2021. In April 2022, the Ningxia Building Materials Group Co.Ltd(600449) reorganization plan was issued, Gansu Qilianshan Cement Group Co.Ltd(600720) suspension planning and the replacement of some assets held by China Communications Construction Company Limited(601800) , urban and rural China. The problem of horizontal competition of Northwest cement is being solved at an accelerated pace. By the end of 2021, xintianshan had a total clinker production capacity of 330 million tons, commercial concrete production capacity of 420 million tons and aggregate production capacity of 190 million tons, ranking first in China.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 14.0 billion yuan, 15.1 billion yuan and 15.6 billion yuan respectively, and the corresponding dynamic PE on April 29 will be 8, 7 and 7 times. Based on ① the recovery of demand after the epidemic, ② the expectation of comprehensive infrastructure, ③ the improvement of internal governance and cost optimization after the reorganization of the company, as well as the release of price elasticity in southwest and other places, the “recommended” rating will be maintained.
Risk warning: the landing of infrastructure projects and the weather change are less than expected; Risks of fluctuations in real estate policies.
