Events:
Qilian Mountain released its semi-annual report of 2022: in the first half of 2022, the company realized operating income of 3.951 billion yuan, an increase of 19.67% over the same period last year, and net profit belonging to shareholders of listed companies was 502 million yuan, down 16.43% from the same period last year.
Main points of investment:
The volume and price of cement rose in the first half of the year, partly offsetting the sharp rise in costs. The company realized operating income of 3.951 billion yuan, up 19.67% over the same period last year; realized total profit of 686 million yuan, down 8.85% from the same period last year; and realized net profit of 502 million yuan belonging to shareholders of listed companies, down 16.43% from the same period last year. The decline in the company's profits is mainly due to rising production costs. During the reporting period, the company's limestone for production was mainly supplied by its own mines, and its rich mine resources avoided the risk of fluctuations in raw material prices, but the shock of coal prices pushed up fuel costs, and rising oil prices pushed up logistics costs. as a result, the overall production cost of the enterprise rose, and the production and operation faced challenges. The gross profit margin and net profit margin decreased by 27.86% and 14.05% respectively compared with the same period last year.
In the second half of the year, regional infrastructure may be revived, and restructuring will proceed steadily. The company has a market share of 47% in Gansu, 25% in Qinghai and 14% in Tibet, building a regional, chain-like and gridded market pattern. In the first half of 2022, investment projects in the western region advanced steadily, and the western region accounted for 6 of the 10 provinces with the highest year-on-year increase in the operating rate of construction machinery. With the gradual stabilization of the epidemic, in the second half of this year, the cement demand in the Gansu, Qinghai and Tibet region where the company is located is expected to benefit from the resumption of key projects, and the contradiction between supply and demand may ease. At the same time, according to the announcement, the company has made steady progress in the exchange of major assets in urban and rural areas in China, and all parties are promoting the audit and evaluation of related assets. China Communications and Construction, urban and rural areas of China have signed a "escrow intention Agreement" with Tianshan shares on the cement assets purchased by the company. After the completion of the asset exchange, China National Building Material's cement business will be further integrated. The quality of the company's assets of China Communications and Construction and China's urban and rural design business is better.
Profit forecast and investment rating: the company achieved year-on-year revenue growth in the first half of 2022, while profits declined due to rising costs. The national cement demand is lower than expected, the performance of the northwest region is slightly better than the national average, the company's profit space is squeezed by rising costs, and the northwest infrastructure projects may resume work in the second half of the year. For the sake of prudence, regardless of the impact of this restructuring, we estimate that the company's revenue from 2022 to 2024 will be 81.38,84.88 and 8.689 billion yuan respectively, and its net profit will be 11.2,12.24,1.284 billion yuan respectively, corresponding to 7.75,7.09,6.76 times of PE.
Risk tips: restructuring matters are not moving forward as expected; raw fuel prices continue to rise; cement prices have fallen sharply; cement demand has fallen sharply; the progress of infrastructure investment is not as expected; and the epidemic has repeatedly affected construction and the economy.