Main points of investment
The company released its 2021 results: revenue from + 12.2% to 8 billion yuan, gross profit from + 1.5% to 2.38 billion yuan, and net profit from + 1.6% to 1.59 billion yuan. The proposed dividend per share for the whole year amounts to 0.087 yuan, with a dividend payout ratio of 29.9%.
Comments: year-on-year revenue of cement plate increased 14.9% to 6.88 billion yuan, new projects at home and abroad were put into production, production and sales volume reached an all-time high, cost control was good, and gross profit per ton increased by 5 yuan / ton, which is better than that of peers.
Shipments are high in front and low in back. Cement-clinker sales for the year were 20.3 million tons, up 2.0% year-on-year. 21H2 cement-clinker sales fell 13.1% from a year earlier.
The average price rose, completely offsetting the increase in costs. The average price of cement rose 38 yuan / ton to 339 yuan / ton over the same period last year, and the average cement price of 21H2 increased from + 69 yuan / ton to 360 yuan / ton.
The cost of coal rose sharply, the cost of cement tons increased by 33 yuan / ton compared with the same period last year, and the gross profit of cement tons increased by 5 yuan / ton compared with the same period last year, corresponding to a gross profit margin of 31.0%.
Aggregate business has developed rapidly, sales diluted costs, and gross profit per ton has risen. Aggregate annual revenue increased by 21.6% compared with the same period last year, accounting for 1.9% of revenue. Year-on-year sales increased by 27.9%, gross profit per ton increased by 3 yuan per ton, and gross profit margin increased by 56.9%.
There is a lot of pressure on businessmen. The annual revenue of the merchants is-20.0% compared with the same period last year, accounting for 7.1% of the revenue. The annual sales volume of merchants and mixers fell 14.6% from the same period last year, the average selling price was-28 yuan per cubic meter, the gross profit per ton was-11 yuan per ton, and the gross profit margin was 18.8%.
The exchange gain is 290 million yuan, which increases the profit. The net exchange gain for the year was 290 million yuan (a loss of 150 million yuan in 2020), which is the financial treatment of long-term payables after the conversion of US dollars into Mozambican legal tender meticais.
The scale of financial leases has shrunk and the company is actively paying back.
The African strategy is making steady progress. The Mozambican project was launched in early 2021, the DRC project is expected to start production in the second half of 2022, and the Ethiopian project is under construction and is expected to start production in 2023.
During the period, US $600 million of foreign debt was issued, increasing the debt ratio and boosting the development of overseas business.
Our point of view: a number of infrastructure projects in Shaanxi are under way, and it is expected that the Xiyan Expressway, Xikang Expressway and Xi'an-Wuhan high-speed rail will have a greater impact on cement demand in 2022, and, these projects mainly pass through the radiation area of the western cement base, so it is expected that the demand for cement in the western region will be more obvious, and we expect the local cement demand in Shaanxi to have a strong support in 2022. The company is actively developing its business in Africa to create another growth pole.
The company is in the resonance period of opportunities at home and abroad. We estimate that the company's net profit from 2022 to 2024 will be 13.7,14.4 and 1.53 billion yuan respectively, compared with-13.7%, + 5.4% and + 6.2% respectively. The current share price is 4.1 times the 2022 PE, PB's valuation is 0.46 times (the historical center of the past five years is 0.77 times), the potential dividend yield is 7.2%, the second shareholder Anhui Conch Cement increased his stake to 27.43%, close to the majority shareholder's shareholding, focusing on possible tender offer opportunities.
We maintain a "prudent overweight" rating with a target price of HK $1.61.
Risk hints: deterioration of economic fundamentals, collapse of industry coordination, sharp fluctuations in raw material prices, credit risk, corporate governance risk