1H22 performance is in line with previous performance forecast
The company announced 1H22 results: revenue 16.845 billion yuan, year-on-year + 3.2%; return to the mother net profit of 1.141 billion yuan,-7.1% year-on-year. Of this total, 2Q22's revenue was 11.877 billion yuan, + 5.9% compared with the same period last year, and its net profit was 1.374 billion yuan, + 7.4% compared with the same period last year. The company's 1H22 performance is in line with the previous performance forecast.
1) sales declined compared with the same period last year. 1H22 North China cement production year-on-year-15.1% Jie 1H22 cement clinker sales of 38.43 million tons, year-on-year-19.9%; we estimate that the company's 2Q22 sales are ~ 26 million tons,-21% year-on-year. 2) the average price per ton is the same as that of the previous month. We calculate the average price of cement clinker per ton of 1H22 Company ~ 365 yuan (year-on-year + 70 yuan or + 24%). Based on the above sales estimates, under the full revenue caliber, we estimate the price of 2Q22 cement clinker ton 457 yuan (year-on-year + 117 yuan or + 34%, month-on-month ratio + 15%). 3) the gross profit per ton increased slightly compared with the same period last year. We calculate that the cost of cement clinker per ton of 1H22 company is from + 63 yuan (or + 29%) to 281 yuan, and the gross profit per ton is from + 7 yuan (or + 9%) to 84 yuan. At full cost, we estimate that the cost per ton of cement clinker of 2Q22 company is from + 105yuan (or + 44%) to 343yuan, and the gross profit per ton is from + 12 yuan (or + 11%) to 114yuan. 4) the rate of sales and financial expenses has basically remained stable, and the rate of management expenses has been improved to a certain extent. 1H22 company sales, financial expense rate year-on-year-0.1ppt/-0.1ppt, in the context of sales contraction cost control is good; due to repairs, amortization and other maintenance costs increased, 1H22/2Q22 company management expense rate year-on-year + 0.6ppt/+1ppt.
5) the cash flow of business activities is obviously under pressure. The net cash flow of 1H22's operating activities is about 810 million yuan,-74.3% compared with the same period last year, and the net current ratio is about 0.66. this is mainly due to a substantial increase in the cost of raw materials such as coal, resulting in a substantial increase in the cash paid for procurement.
Trend of development
Demand is expected to improve marginally during the peak season. We believe that the demand for cement in the first half of the year was affected by the decline in real estate, sporadic epidemics, and the lag of physical infrastructure workload, so the whole industry and national production and marketing were under pressure. The decline of the company's sales volume in the first half of the year is not much different from that of the industry, while the price and ton gross margin maintain a good level (1H22 cement clinker ton gross margin still has a small increase compared with the same period last year). We believe that with the physical workload of capital construction on the ground and the arrival of the traditional peak season of "Jinjiu Silver Ten", demand is expected to improve marginally, leading to a warming of the company's cement production and sales. We believe that if the company can maintain a relatively high price level, it can also effectively hedge against the cost pressure caused by high coal prices, and there is still some room for expansion of the company's profit per ton under the background of production and sales volume.
Profit forecast and valuation
Due to the adjustment of the full-year operating assumption, we reduced the net profit of 2022 9.5x/8.1x 23e by 27.6% to 2.59 billion yuan, and the current share price corresponds to 2022max 23e. We maintain our outperform industry rating, lowering our target price by 19.9% to 11.77 yuan, corresponding to 2022 Candle 23e 12.4x/10.5xP/E, implying 30.1% upside space.
Risk
Demand for cement fell more than expected, and coal prices rose higher than expected.