Q1 revenue is basically flat, profits are under pressure. In the first quarter of 2022, the company achieved revenue of 2.736 billion yuan, + 0.96% compared with the same period last year. The stable revenue performance was mainly due to the obvious year-on-year increase in cement prices in Jiangxi. At the same time, compared with other regions, the local downstream construction was less affected by the epidemic; the net profit reached 209 million yuan,-35.64% compared with the same period last year. The main reason for the profit decline is due to the obvious year-on-year increase in costs caused by the rise in coal prices.
The level of profit is slightly under pressure, and the level of cost control remains stable. In 2022, Q1 achieved a gross profit margin of 21.5%, year-on-year-4.7pct, and a net profit rate of 10.9%, year-on-year-5.4pct. The ability of cost management and control remained stable, and the expense rate during the period reached 6.27%, which was basically the same as the same period last year, of which the sales / management / finance / R & D expense rates were 1.1%, 4.6%, 0.2%, 0.3%, respectively, and the year-on-year change + 0.5pct/-0.6pct/+0.1pct/-0.1pct, among which the increase in sales expense rate was mainly due to the increase in sales service charges. The increase in the rate of financial expenses compared with the same period last year was mainly due to an increase in interest expenses. The company's cash flow improved compared with the same period last year, and the net cash flow of operating activities was 1 million yuan, compared with-124 million in the same period last year. The asset-liability ratio reached 37.7% in the first quarter, compared with + 0.23pct.
Strengthen strategic cooperation and promote the expansion of the upper and lower reaches of the industrial chain. During the reporting period, the company signed a strategic cooperation framework agreement with the government of Qingyuan District, Ji'an City, Jiangxi Province. the two sides will cooperate in industrial fields such as new materials, prefabricated buildings and green building energy-saving materials, mine environmental protection governance and development, commercial concrete, comprehensive utilization of resources, etc. In addition, the company also signed a cooperation framework agreement with Jiangxi Yutu New Materials Co., Ltd. in the future, the two sides will simultaneously develop business cooperation in the upper and lower reaches of the industrial chain such as sand aggregate and lime around white cement. and carry out mergers and acquisitions of other white cement enterprises or cement production capacity acquisition and other cooperation.
Risk hints: the epidemic situation is repeated; the increase in supply is higher than expected; the increase in cost is higher than expected.
Investment advice: strengthen employee motivation and maintain "buy" rating
At the beginning of this year, the company issued the 2022 stock option incentive plan, the exercise year is from 2023 to 2025, and the assessment requires that the operating income in the three years will increase by 20%, 32%, 45%, respectively, compared with 2021. The ROE in 2023-2024 is not lower than the 75 quartile level in the same industry. In 2025, the ROE ranks in the top three in the industry, and the annual dividend rate is not less than 30%, which will help to further increase the incentive for core employees and enhance the company's future competitiveness. The company ranks in the forefront of cement market share in Jiangxi Province, actively extends the upper and lower reaches of the industrial chain in recent years, and will further layout clean energy projects such as photovoltaic power generation in the future to create and cultivate new profit growth points for the company. It is estimated that the company's EPS for 22-24 will be 2.1max 2.2max / share, corresponding to PE 5.3ppm 4.8x, maintaining a "buy" rating.
