The company issued a performance forecast for 2022, with an estimated annual return net profit of 5.1 to 640 million yuan, a decrease of 23.9% to 39.2%, and a deduction of 42.0% to 42.0% for non-return net profit of 4.4 to 560 million yuan. The sluggish demand for concrete in 2022 and the high cost put pressure on the company's performance. However, the steady growth of the number of contracts signed by the company, the introduction of Anhui Conch Cement as a war investment, and the continuous promotion of regional strategy is expected to enhance profitability. Maintain the company's buy rating.
Support the main points of rating
The net profit for the whole year has declined, and the decline in Q4 is relatively large. The company expects to return to the mother in 2022 with a net profit of 5.1-640 million yuan, a decrease of 23.9%, 39.2%, and a non-return net profit of 4.4-560 million yuan, with a reduction of 24.8%, 42.0%. According to the median calculation, the net profit of 2022Q4 is 100000 yuan, which is the same as the decrease of 99.96%.
The demand for concrete is declining and the cost of coal remains high. In 2022, the new real estate construction area totaled 1.21 billion square meters, a decrease of 39.4%. The growth rate of infrastructure investment was 11.5% year-on-year, significantly higher than the level of 2018-2021, but China's cement production decreased by 10.8% in 2022. To a certain extent, it shows that the physical workload of capital construction is lower than expected, and the demand for cement and concrete is declining. In 2022, the company's concrete sales volume totaled 5595.0 square meters, with a decrease of 8.6%. In addition, the overall high coal price in 2022 caused concrete enterprises to bear greater cost pressure.
The number of contracts signed by businessmen is growing steadily, and the recovery of real estate and the landing of infrastructure are expected to boost demand. The company is the only commercial platform under China Construction Group, and the proportion of commercial concrete provided to China Construction Group in the total amount of commercial concrete is currently low. The number of contracts signed by the company in 2022 was 12780.9 million square meters, an increase of 7.3 percent. The steady increase in the number of contractors lays the foundation for performance improvement. In 2023, the financing pressure of real estate enterprises is gradually reduced, real estate sales and construction are expected to improve, and the backlog of infrastructure projects is also expected to start, further boosting demand from businessmen.
The company's profitability is expected to rise steadily. The company introduced Anhui Conch Cement as a strategic investor. The cooperation between the two sides will enable the company to obtain cement procurement concessions and help the company to expand the market. The company continues to promote the regional strategy, the expansion of the new regional business scale is expected to play a scale effect, and further enhance profitability.
Valuation
Considering that the company's profitability is expected to improve steadily with the improvement of mixed demand, strategic cooperation with conch, and the continuous expansion of the new regional business scale, the current performance is under phased pressure, and we partially reduce the profit forecast. It is estimated that the company's revenue from 2022 to 2024 will be 242.3 yuan, 290.8 yuan and 32.57 billion yuan, the net profit will be 6.3,9.3 and 1.2 billion yuan, and the EPS will be 0.50,0.74,0.95 yuan, maintaining the company's buying rating.
Main risks faced by rating
The landing of infrastructure is not as expected, the effect of business expansion is not as expected, and the effect of strategic cooperation is not as expected.