Events:
Jidong cement released 2022 semi-annual report: in the first half of 2022, the company achieved operating income of 16.845 billion yuan, an increase of 3.24% over the same period last year; the net profit of shareholders belonging to listed companies was 1.14 billion yuan, down 7.08% from the same period last year.
Main points of investment:
Demand fell, prices rose, revenue grew against the trend in the first half of the year, and profits declined. In the first half of the year, due to the repeated domestic epidemic and the downturn in real estate, the demand for cement was obviously weaker than that in the same period of previous years, and there was no seasonal rebound in the peak season in April and May. During the reporting period, the company achieved comprehensive sales of 38.43 million tons of cement and clinker, down 19.94% from the same period last year. In terms of prices, the price base in North China was relatively low in the first half of 2021, and prices rose and fluctuated high in the second half of 2021 driven by coal prices. at present, prices declined slightly from the previous month, but increased significantly compared with the first half of 2021. In the context of flagging comprehensive sales and rising cement prices over the same period last year, the company achieved operating income of 16.845 billion yuan during the reporting period, an increase of 3.24% over the same period last year, showing resilience. On the cost side, coal prices remained high in the first half of the year, the company's costs rose a lot, and the profit level declined to a certain extent. during the reporting period, profits attributed to shareholders of listed companies reached 1.14 billion yuan, down 7.08% from the same period last year. The company's comprehensive sales gross profit margin and net profit margin were 23.66% and 7.3% respectively, down 6.08% and 5.12% from the same period last year.
The demand for cement in North China is resilient, infrastructure construction is concentrated in the second half of the year, and the company's profits are expected to improve.
The decline of cement production gradually slowed down in the first half of 2022, and the downward trend of prices for many months in a row basically ended. Against the background of steady growth, the construction of major projects in the Beijing-Tianjin-Hebei region has been launched. The Xiongan New area has started 43 projects with a total investment of 60.1 billion yuan. As a regional leading enterprise, the company has a production capacity of more than 30% in North China and more than 50% in Beijing-Tianjin-Hebei region. Since late July, the company's comprehensive sales of cement and clinker have achieved positive growth compared with the same period last year.
On the one hand, the company promotes regional M & A, market share and industry voice, on the other hand, on the basis of continuously strengthening the main business of cement clinker, it extends to sand and gravel aggregate, environmental protection, mineral powder, admixture and other business. committed to industrial chain extension and green transformation, steady growth is expected.
Profit forecast and investment rating: the demand of the cement industry was sluggish and the cost increased in the first half of the year. North China was relatively less affected by the epidemic, and its performance was better than the industry average. At the same time, the construction in the third quarter was not affected by the high temperature Rain Water weather. With the development of infrastructure and the concentrated landing of projects, it is expected that demand will recover in the second half of the year. As the leader in North China, the company's performance is expected to pick up gradually. In view of the weak cement demand in the first half of the year, the company's sales decline is relatively large, and the recovery in demand in the second half of the year may not be able to offset the decline in the first half of the year, we downgrade the company's profit forecast, and expect the company's 2022-2024 net profit to be 26.02,29.6 and 3.17 billion yuan respectively, corresponding to 9.25,8.13,7.59 times of PE respectively, maintaining the company's "overweight" rating.
Risk tips: raw fuel prices continue to rise; cement prices have fallen sharply; cement demand has fallen sharply; infrastructure investment has been less than expected; and the epidemic has repeatedly affected construction and the economy.