It has been 20 years since the company was listed on the market, and it has changed from the original Jinhua cement Plant to an asset company of "cement + medicine". The dual-main business pattern of "cement + medicine" is quite bright. Its cement assets are cyclical assets whose earnings have been improved at the bottom, while pharmaceutical assets are growth assets with broad prospects for the industry. With the help of the strategic cooperation with China National Building Material in 2007, the profitability of cement assets has been significantly improved, while the equity stake of Tianshili Group acquired by the capital increase in 1998 is the company's core asset with the greatest appreciation potential.
Cement assets are mostly concentrated in eastern China, and profitability is expected to rise steadily. The corresponding equity sales of the company's cement assets are about 6 million tons, and 2 Unix 3 are concentrated in the greater East China region. The cement industry in East China has entered a mature period, and there is little pressure on the new supply. China National Building Material's regional market integration since 2007 has greatly improved the competition pattern of the industry. The improvement of supply and demand and the improvement of the competition pattern of the industry have greatly improved the profitability of the East China cement industry, showing a significant rise in the profit center. In the next 2-3 years, the pressure of new production capacity in East China is relatively small, and the profitability of the industry is expected to rise steadily under the background of weak economic recovery. The profitability of the corresponding company's cement assets will be improved.
Pharmaceutical assets: the profit of Pinnacle Pharmaceutical is stable, and the equity assets of Tianshili Group have high growth. The company's pharmaceutical assets are composed of two parts: Pinnacle Pharmaceutical, which is merged into the main business, and Tianshili Group, which contributes to investment income. Pinnacle Pharmaceutical Co., Ltd. in recent years, the overall profitability is stable, growth and profitability are relatively general. The company holds 20.76% of Tianshili Group, correspondingly indirectly holds about 10% of Tianshili shares, which is undoubtedly the best asset of Tianshili Group. The profitability of Tianshili Group's unlisted assets has continued to improve in recent years, among which Tianshilidi Pharmaceutical Co., Ltd., a chemical asset platform, is expected to inject Tianshili shares in 2013. Tianshili Group's health products and overseas marketing section are still under cultivation, and profitability is expected to improve.
The company's assets have a strong revaluation potential, giving the company an "overweight" rating. We estimate that the EPS of the company from 2013 to 2015 is 0.52,0.67,0.85 yuan respectively, and the corresponding PE is 16.3,12.7,9.9 times. After the valuation of the company's assets, the company has a strong potential for asset revaluation. Coverage for the first time, giving the company an "overweight" rating.
Risk hint: the lower-than-expected macroeconomic recovery leads to lower-than-expected profits in the company's cement assets; the company's long-term equity investment is confirmed to be lower than expected.