Revenue remained stable and Q2 performance increased slightly. 2022H1 achieved operating income of 16.845 billion yuan, year-on-year + 3.24%, net profit of 1.141 billion yuan, year-on-year-7.08%, basic EPS of 0.4292 yuan per share, of which Q2 single-quarter income was 11.877 billion yuan, + 5.86% year-on-year, net profit of 1.374 billion yuan, + 7.41%. The slight pressure on the overall performance is mainly caused by repeated epidemic situation, weak performance of real estate infrastructure, rising costs and other factors. under many unfavorable factors, the company's Q2 performance has shown a certain degree of resilience, on the one hand, due to the high cement price in North China, on the other hand, after the joint venture company completed the absorption and merger at the end of last year, the profit and loss ratio of minority shareholders decreased significantly.
Earnings remain resilient and cash flow performance is under pressure. The company's cement clinker sales volume in the first half of the year was 38.43 million tons, down 19.94% from the same period last year. We estimate that the price of cement clinker tons in the company in the first half of the year was 365.0 yuan, up 70.1 yuan from the same period last year. On the one hand, the price in North China was high after power cuts in the second half of last year, on the other hand, the regional coordination was well implemented in the first half of this year. Affected by the rise in the price of raw materials, the cost per ton increased by 68.4 yuan to 281.1 yuan, and the gross profit per ton reached 83.4 yuan, a slight increase of 1.7 yuan over the same period last year. The company continued to optimize its cost management and control in the first half of the year, with the expense rate reduced to 14.70% from the same period last year, with sales / management / finance / R & D expense rates falling from-1.6/+0.6/-0.1/+0.004pct to 1.5% to 10.8% 2.0% 0.4%. Affected by the sharp rise in the price of raw materials such as coal, the net cash flow of operations decreased by 74.34% to 814 million yuan in the first half of the year compared with the same period last year. At the end of the reporting period, the company's asset-to-debt ratio rebounded slightly to 46.91 per cent from the end of last year.
We will continue to optimize the industrial layout and speed up industrial transformation and upgrading. During the reporting period, the company's cement industry integration and production capacity construction, completed the equity acquisition and delivery of Shanxi China Resources Fulong Company, Panshi New Building Materials Industrial Park started as scheduled in April; Tongchuan Company, Panshi Company, Jiaozuo new material aggregate production line project construction was smooth; solid waste disposal capacity increased by 320,000 tons / year to 4.96 million tons / year in the first half of the year. In terms of industrial upgrading, on the one hand, during the reporting period, the company strengthened the transformation of energy saving and consumption reduction, increased the development and use of alternative fuels, and on the other hand, accelerated the construction of intelligent factories and promoted the deep integration of traditional industries and digital intelligence. to provide a guarantee for the company's long-term development in the future.
Risk hints: the increase in supply is higher than expected; the landing of the project is lower than expected; and the epidemic situation is repeated.
Investment advice: demand improvement is expected to maintain the "buy" rating.
With the gradual improvement of epidemic control, the project construction demand accumulated by the previous policy is expected to be gradually released in the second half of the year, and the company as a cement leader in North China is expected to benefit more. After the completion of the merger of the joint venture company last year, the operating efficiency and management level are expected to be further improved, and we are optimistic about the improvement of the company's operating quality in the future.
Taking into account the impact of demand in the first half of the year, the EPS for 2022-24 was downgraded to 1.17, 1.26, and 1.31 yuan per share (before the adjustment, it was 1.5, 1.6 and 1.7 yuan per share), corresponding to a PE of 7.7, 7.2 and 6.9x, maintaining a "buy" rating.