This report is read as follows:
The company released the mid-2022 report, profitability hit bottom, Q3 earnings are expected to increase month-on-month, maintain the "overweight" rating.
Main points of investment:
Maintain the "overweight" rating. China reported an income of 5.843 billion, down 1.79%, and a net profit of 492 million, a drop of 40.53%, which was lower than market expectations. Considering the impact of the decline of local production in the epidemic, the forecast of EPS from 2022 to 2024 was reduced to 1.36,1.64 and 1.83 yuan respectively.
According to the comparable company's 23-year average of 8 times PE, the target price is lowered to 13.12 yuan (- 1.35) yuan.
We estimate that the company's H1 cement clinker sales fell by about 17% compared with the same period last year; among them, Q2 was affected by the epidemic, and the sales volume decreased by 18% year-on-year. In order to alleviate the inventory pressure, Jiangxi region requires all clinker production lines to stop production for 10 days in August. Q3 sales are expected to maintain a negative growth trend compared with the same period last year, but the decline is expected to slow down.
Q2 profitability returns to 2016 levels, and performance is under pressure. We estimate that the average ex-factory price of company H1 is about 300 yuan / ton, which is basically the same as the same period last year, but the coal cost has risen sharply, and the gross profit per ton has dropped below 60 yuan / tonne. The average ex-factory price of Q2 is about 294 yuan / ton, which is basically the same as the same period last year, but the cost per ton is 32 yuan / ton, the gross profit per ton is 51 yuan / ton, and the net profit per ton is 17 yuan / ton, which has returned to the profit level of 2016. However, in view of the current high inventory situation, it is expected that the price increase caused by the wrong peak may be delayed to the end of August and early September, Q3 profitability is difficult to improve significantly.
Investment income to reduce the drag on performance, continue to increase the cement upstream and downstream industrial chain. Company H1 confirmed that the investment income was 105 million, down nearly 150 million from the same period last year, mainly due to the withdrawal of the company from the Ningbo Dingfeng Mingdao evergreen investment partnership (limited partnership), resulting in a significant reduction in investment income. Continue to increase the effective integration of limestone resources upstream, while market-oriented industrial layout of downstream commercial concrete mixing stations and aggregates.
Risk hint: the extension of the industrial chain is not up to expectations, and the upward risk of coal prices.
