The company's operating income in 2021 was 14.205 billion yuan, an increase of 13.37% over the same period last year, of which cement business and concrete business increased by 12.28% and 9.38% respectively. Under the coordinated development of aggregate and concrete business, the unit cost of concrete is reduced by 6.03%. The release of cement and aggregate capacity will ensure the growth potential of the company's performance, while technological transformation and logistics upgrading will ensure the stability of the company's profit center and maintain the company's "buy" rating.

In 2021, the performance increased by 7.61%, and the performance in the fourth quarter increased significantly compared with the previous quarter. In 2021, the company achieved an operating income of 14.205 billion yuan, an increase of 13.37% over the same period last year, and a net profit of 1.593 billion yuan, an increase of 7.61% over the same period last year.

The operating income of the discounted order in the fourth quarter was 4.57 billion yuan, an increase of 23.88% over the same period last year and 24.04% over the same period last year; the net profit returned to the mother was 464 million yuan, up 1.47% from the same period last year and 53.67% from the previous year, mainly due to the contraction of supply caused by the double control of energy consumption at the end of the year. Cement prices increased by about 30% month-on-month.

The revenue of cement concrete has achieved double growth, and the level of production and marketing is better than the industry average. The company's cement business achieved revenue of 8.359 billion yuan, an increase of 12.28% over the same period last year; revenue of concrete business reached 2.874 billion yuan, an increase of 9.38% over the same period last year; revenue from both businesses exceeded the 2019 level. In 2021, the company's cement output was 24.69 million tons, an increase of 2.45% over the same period last year, and the ratio of production to marketing was 99.28%. The increase in output came from the smooth commissioning of 5100t/d, the second production line of 2021Q4, and the output of concrete was 625.34 million square meters, an increase of 10.72% over the same period last year, and the ratio of production and marketing was 100.15%. The growth rate of production and sales of cement and concrete business is better than the industry average. In terms of unit price, the average selling price of cement clinker in 2021 was 302.01 yuan / ton, an increase of 11.29% over the same period last year; the unit cost was 196.94 yuan / ton, an increase of 16.24% over the same period last year, mainly due to the high increase in coal costs; and the gross profit margin decreased by 2.78pcts to 34.79% over the same period last year. The average selling price of concrete was 458.95 yuan per square meter, down 3.94 yuan per square meter from the same period last year; the unit cost was 329.53 yuan per ton, down 6.03 percent from the same period last year; and the gross profit margin increased by 3.95pcts to 28.20 percent over the same period last year.

Technical upgrading + logistics integration or continuous cost reduction and efficiency. In terms of coal, the company has signed long-term cooperation agreements with a number of coal suppliers, the direct supply of coal is more than 80%, and the standard coal consumption of clinker has decreased by 1.76 kg / ton year on year. In terms of power, the installed capacity of the waste heat generator set that has been put into operation is 80.30MW, and the waste heat generating capacity for the whole year has reached 536 million kWh, and the standard power consumption of clinker has been reduced by 4.14kWh / ton compared with the same period last year, which will continue to stabilize clinker production costs and improve operation efficiency. The company's aggregate production base has been put into production one after another. by the end of 2021, the annual production capacity of aggregate has reached 9 million tons, and the supply of self-produced aggregate reduces the cost of concrete raw materials. The company develops modern logistics synchronously. In 2021, Ganzhou Logistics Company obtained the first network freight platform, NVOCC qualification and online operation in Ganzhou City, which is conducive to the integration of the company's transport resources and improve the transportation efficiency of raw materials and products. or will reduce the company's logistics costs.

Capacity release optimizes capacity layout and provides growth momentum. By the end of the reporting period, the company has an annual production capacity of 14.86 million tons of clinker and 26 million tons of cement, 9 million tons of aggregate and 19.75 million square meters of concrete. In 2020, 1 billion yuan was raised to invest in one 6600d/t (newly built) and two 5100t/d (technical transformation and environmental protection relocation) clinker cement production lines. The 6600t/d production line has been put into production and achieved a profit of 124 million yuan during the year. By the end of the reporting period, the progress of the two relocation production lines reached 74.93%, with a profit of 48.12 million yuan. According to the announcement of the Jiangxi Ministry of Industry and Information Technology, the company's 3.1 million-ton annual production line for replacement has all withdrawn. We judge that the construction of the two production lines will be completed in the first half of 2022 and reach production within the year to optimize the company's cement business capacity layout. The progress of the aggregate project with an annual production capacity of 3 million tons and 2 million tons is 89% and 95% respectively. We expect to put into full production this year and further reduce the cost of concrete raw materials, give full play to the synergy advantage of the industrial chain, and provide momentum for the company's benefit growth.

Risk factors: lower-than-expected demand for real estate and infrastructure; excessive release of new capacity, worsening competition in the industry; and lower-than-expected progress of new projects.

Investment suggestion: combined with the impact of the epidemic on the economy and the company's business planning, we adjust the company's 2022 EPS forecast to 2.22max 2.53 yuan (the original forecast is 2.97max 3.37 yuan), and add 2.71 yuan to the 2024 EPS forecast. Taking into account the industry comparable company valuation (mainly Anhui Conch Cement, Huaxin cement, Jidong cement, comparable company 2022 average valuation 7-8XPE) and the company's historical valuation level (average 8XPE), we give the company 2022 PE8x, corresponding to the target price of 18 yuan, maintain the "buy" rating.