The company announced 22H1 results: revenue fell 1.9% year-on-year to 4.15 billion yuan, gross profit rose 0.7% to 1.35 billion yuan, gross profit margin was 32.6%, net profit fell 37.7% to 660 million yuan, net profit rate was 16.8%.
Comments: the exchange profit and loss in the first half of the year was 30 million yuan (350 million yuan in the same period last year), a decrease of 320 million yuan compared with the same period last year; and in the same period last year, there was an one-time gain of 79.3 million yuan from the sale of Yaobo environmental protection technology project, excluding the effects of these two parts, adjusted net profit fell 15.5% to 670 million yuan year-on-year.
The highly profitable overseas business began to expand, driving the cement sector's revenue in the first half of the year up 6.9% year-on-year to 3.51 billion yuan. In the first half of the year, cement sales of the Mozambican project increased by 127.3% to 500000 tons, the unit price per ton rose by 96 yuan to 509 yuan, and the share of revenue increased to 9.4 percent, contributing a total profit of 220 million yuan, with a profit margin of 47.8 percent.
Driven by overseas business, the company's cement-clinker volume in the first half of the year was-11.2% compared with the same period last year, and the unit price per ton rose 65 yuan compared with the same period last year; the cost per ton increased by 68 yuan, of which the impact of coal price on the cost per ton was about 40 yuan; and the gross profit per ton decreased by 3 yuan to 111 yuan compared with the same period last year.
Aggregate maintained a high growth momentum, revenue increased by 74.2% year-on-year to 120 million yuan, and ton gross profit increased by 18 yuan over the same period last year.
In the first half of the year, the financial cost of tons increased by 9 yuan to 21 yuan compared with the same period last year, mainly due to the issuance of 600 million US dollars of foreign debt in July 2021 to support the development of African business, and the amount of interest-bearing debt increased by 3.48 billion yuan to 8.71 billion yuan compared with the same period last year.
Our point of view: a number of infrastructure projects in Shaanxi are under way, and we are optimistic about the demand for cement in Shaanxi in the second half of the year. These projects mainly pass through the radiation area of the cement base in the west, which has a strong support for the demand for cement in the west. The construction progress is gradually resumed in the second half of the year, and the project is expected to accelerate in September, and the recovery of quantity can be seen. In the second half of the year, the company's domestic shipment target is to achieve positive growth.
The company has entered the strategic harvest period in Africa, the excellent pattern of business in Africa is highly profitable, Mozambique has seen huge profits, and the second growth pole has taken shape. The other two projects will begin to contribute profits in 2023 and 2024, when the contribution performance is expected to surpass that of China, and the company will usher in a resonance period of opportunities at home and abroad.
We raise the company's profit forecast and expect the company's net profit from 2022 to 2024 to be 14.2,16.5 and 1.95 billion yuan respectively, compared with-10.7%, + 16.8% and + 18.2% respectively. The current share price is 3.2 times the PE of 2022 EPS, the valuation of PB is 0.37 times (the historical center of the past five years is 0.70 times), the potential dividend yield is 9.2%, and the second shareholder Anhui Conch Cement increases his stake to 29.14%, close to the shareholding of major shareholders, focusing on possible tender offer opportunities.
We maintain a "prudent overweight" rating with a target price of HK $1.48.
Risk hints: downward economic fundamentals, coordinated rupture of industries, sharp fluctuations in raw material prices, credit risks, corporate governance risks