The scale of revenue remained basically stable, and the performance was under pressure. In the first half of 2022, the company achieved revenue of 5.844 billion yuan, year-on-year-1.79%, net profit of 492 million yuan, year-on-year-40.53%, and non-return net profit of 472 million yuan, year-on-year-36.75%. The revenue and net profit of the company in the second quarter were 3.107 billion yuan and 283 million yuan, respectively, compared with the same period last year. Although the cement business was under pressure in the second quarter, the expansion of the trading plate and aggregate business scale hedged the impact of the revenue side to a certain extent, and the overall revenue remained relatively stable in the first half of the year; affected by the pressure on the cost side and the decrease in net income from investment, the profit side is under pressure.

The main cement industry is under a small amount of pressure, and the level of cost control remains stable. In the first half of the year, the company's cement clinker business income was 2.821 billion yuan, down 18.37% from the same period last year, mainly due to the backdrop of the epidemic, downstream demand lagged behind, at the same time, some of the company's production lines were suspended due to the epidemic; affected by the upward coal price, the cement business gross profit in the first half of the year was 30.77%, year-on-year-10.69pct. Overall, the company's comprehensive gross profit margin in the first half of the year was 19.6%, year-on-year-8.8pct, net profit rate 11.7%, year-on-year-7.4pct. The ability of cost control and control remains stable, and the expense rate during the period is 6.13%, year-on-year-0.2pct, of which the sales / management / finance / R & D expense rate is 1.14%, 4.42% and 0.42%, respectively, and the year-on-year change is-0.03pct/-0.03pct/+0.05pct/-0.16pct. The increase in financial expense rate is mainly due to the increase in interest expenses. The net cash flow of the company's operating activities was-82 million yuan, compared with 241 million in the same period last year,-134.06% compared with the same period last year, mainly due to the decline in cash received from the sale of goods and services. The asset-liability ratio in the first half of the year is 39.48%, which is higher than that at the end of last year + 2.02pct.

Optimize the strategic layout and actively expand the "cement +" model. At the end of the reporting period, the company had an annual output of 14 million tons of aggregate and 2200 square meters of commercial mix, an increase of 55.6% and 11.4% respectively over the end of last year. In the first half of the year, the income of aggregate and commercial mix reached 154 million yuan and 1.205 billion respectively, + 112.57% and-3.29% respectively compared with the same period last year.

At present, the company announced that it intends to invest 174 million to build a concrete production line with an annual output of 800000 cubic meters in Ganzhou and support the integration of new closed photovoltaic buildings, so as to further expand the market share of commercial and mixed areas.

Risk tips: demand is lower than expected; cost rise is higher than expected; epidemic situation is repeated.

Investment advice: strengthen incentives, increase the holdings of major shareholders, and maintain the "buy" rating.

The company issued the stock option incentive plan in the first half of the year, which will help to further stimulate the endogenous motivation of the team and lay a solid foundation for the sustainable and healthy development of the company. In June, the company's controlling shareholders plan to increase their holdings of the company's shares by no less than 50 million yuan and no more than 100 million yuan, so as to promote the sustained, stable and healthy development of the company and enhance investor confidence. Taking into account the impact of the epidemic and the cost side in the first half of the year, the EPS for 2022-24 was downgraded to 1.9x2.0 yuan per share (before the adjustment, it was 2.3yuan per share), corresponding to a PE of 6.2pm 5.5max 5.2x, maintaining the "buy" rating.