Incident: The company released its 2018 annual report, achieving annual revenue of 5.021 billion, an increase of 39.83%, a net profit of 450 million, an increase of 36.08%, a deduction of 427 million yuan, an increase of 23.9%;
The performance has advanced by leaps and bounds. The company's revenue/return to parent CAGR reached 24%/147% in the past 5 years, 34%/45% in the past 3 years, and 39.8% (-3.7 pp)/36,1% (+5.5pp) during the reporting period, and continued to maintain a high level of growth
Strong production and sales have increased gross margins and net interest ratios. Cash flow continues to grow, profit quality is high, and debt ratios have declined markedly. The gross profit margin during the reporting period was 32.59% (+3.4pp), mainly due to strong production and sales in the building materials business and the transfer of R&D expenses; the sales/management/finance/period rate was 0.63% (-)/12.35% (+3.1pp)/0.52% (-0.5pp)/13.5% (+2.5pp). The same 86% increase in management R&D expenses was due to an increase in remuneration, an increase in equipment overhauling costs, and a 29% reduction in financial expenses through litigation; tax rate 10.5% (+2.3pp); net interest rate of 17.1% (+1pp); payout Compared to 109.08% (-16 pp)/109.75% (-13 pp), operating cash flow of 686 million yuan increased 26%, 1.5 times that of the return to mother during the corresponding period, and the profit quality was high; the debt ratio of 49.83% (-7pp) decreased significantly;
Tibet's leading cement company has fully benefited from strong market demand and production capacity gaps, and plans to issue convertible bonds to continue expanding production capacity. Tibet's infrastructure is poor, and demand in the construction materials market is strong. The investment growth rate in 2015-2017 was 20%/23%/24%, the growth rate of construction output was 50%/4%/33%, and the region's GDP/investment growth rate was about 10%/10% in 2018. It is expected that the GDP growth rate in 2019 will remain around 10%, and all 24 major projects will be started; due to physical geographical conditions and transportation radius restrictions, the local cement production capacity gap is large.
In 2017-18, the company's cement production and sales reached 5.2 million tons (+40%) /6.42 million tons (23.5%), accounting for about 2/3 of the total production capacity in the region. Both cement revenue and gross profit grew strongly during the reporting period, achieving revenue of 3.439 billion yuan (+28.7%), accounting for 68% (-6%), and gross margin of 42.42% (+6.8pp). During the reporting period, the company plans to actively carry out preliminary work on the second 2000t/d clinker new dry cement production line and Linzhi cement grinding station project in Qamdo Gaozheng, and passed a bill to raise no more than 1.12 billion dollars of convertible bonds at the end of the year to raise funds for Qamdo and Linzhi production expansion projects. Currently, feedback from the Securities Regulatory Commission has been accepted and responded to, if feedback from the Securities Regulatory Commission is received and responded to, if feedback from the Securities Regulatory Commission is received and responded to, if feedback from the Securities Regulatory Commission is currently accepted and responded to, if feedback from the Securities Regulatory Commission has been received and responded to, if feedback from the Securities Regulatory Commission has been received and responded to, if feedback from the Securities Regulatory Commission has been received and responded to by the Securities Regulatory Commission, Successful distribution will expand production capacity advantages and capacity Realizing a diversified business layout;
The dual main business pattern is maturing, and project/out-of-province revenue is growing faster. The company has scarce qualifications in the province, such as road and bridge professional contracting level 1. The construction materials dual business pattern is maturing, and is actively expanding markets outside the province. In 2017, the consortium won the bid for the 11 billion Kaili high-speed PPP project and undertook 850 million civil engineering projects for the project during the reporting period. Annual project revenue was 1,053 million (+193%), accounting for 21% (+11pp); revenue from outside the province was 404 million (+159%), accounting for 8% (+4pp);
Profit forecast and investment rating: The company is expected to achieve operating income of 6.504 billion yuan from 2019 to 2021, 8.097 billion yuan and 9.787 billion yuan respectively; net profit of the mother is 593 million yuan, 745 million yuan and 921 million yuan respectively; EPS is 0.69 yuan, 0.86 yuan and 1.06 yuan respectively, and the corresponding PE is 137X, 10.9X and 8.8X respectively. First coverage, giving a “recommended” rating.
Risk warning: 1. Investment risk; 2. The issuance of convertible bonds fell short of expectations; 3. The project fell short of expectations.