Q4 profit is under pressure due to many factors, and it is optimistic about the elasticity of demand for 22 years.
The company released its 2021 annual report on March 17, with annual revenue of 7.67 billion yuan, a decrease of 1.8%, and a net profit of 950 million yuan, a decrease of 34.1%. Of this total, the revenue of Q4 was 1.85 billion yuan, an increase of 3.1%, and the net profit of non-return was 10 million yuan, a decrease of 75.3%.
Support the main points of rating
Pressure on 21Q4 profits caused by many factors: in the fourth quarter alone, the company lost 6 million yuan in net return to its mother, deducting 14 million yuan in non-return profit, with a decrease of 75.3%; the reason is: 1. The rate of sales expenses in the fourth quarter was 1.7%, with an increase of 13.1 PCT, and the subsidiary Zhangxian cement Company cross-border mining, with an estimated environmental protection and administrative fine of 54 million yuan; 3, the company's asset impairment loss of 61 million yuan in the fourth quarter.
The contradiction between supply and demand in the region has intensified, and cement sales have declined throughout the year: according to our estimates, the company's annual cement clinker sales volume is about 23.536 million tons (- 193000 tons), with a unit price of 300.0 yuan (- 0.20 yuan), a ton cost of 214.8 yuan (+ 27.4 yuan), and a gross profit of 85.2 yuan (- 27.7 yuan) per ton. Throughout the year, insufficient infrastructure construction superimposed the impact of low-price cement in other provinces, and the contradiction between regional supply and demand intensified, resulting in pressure on the company's cement sales.
Cost pressure led to a decline in profits: coal prices rose sharply throughout the year, and the price centers of Lanzhou, Xi'an and Hami rose by 36.8%, 82.0% and 44.3% respectively, resulting in a significant increase in the company's fuel costs, dragging down the annual gross profit margin of 27.6% and the net profit rate of 13.4%, which was 7.8pctcore 6.4pct lower than the same period last year.
It is optimistic that steady growth will bring about an increase in demand, and the company, as a regional leader, has performance flexibility: the increase in demand brought about by infrastructure investment under the tone of steady growth in 2022 is worth looking forward to; the start of the construction of the three "East and West" calculation hubs, including Gansu, Ningxia and Inner Mongolia, is expected to boost regional cement demand on the one hand, and reduce the inflow of cement from other provinces on the other hand to improve the regional supply and demand pattern. As the cement leader in Gansu, the company has strong performance flexibility after the recovery of demand and the repair of tons of profits.
Valuation
The company's performance is lower than expected, taking into account the contradiction between regional supply and demand, coal cost pressure, we partially downgrade the profit forecast. It is estimated that from 2022 to 2024, the company's revenue will be 83.6,88.5 and 9.12 billion yuan respectively, the net profit will be 15.4,16.3 and 1.69 billion yuan respectively, and the EPS will be 1.99,2.10,2.18 yuan respectively.
Main risks faced by rating
Infrastructure, real estate investment growth is not as expected, Ningxia, Shaanxi cement impact, coal prices rise.