20H1's net profit increased by 56% compared with the same period last year. The company is optimistic about the medium-and long-term improvement of the regional pattern. According to the semi-annual report for 2020, 20H1 achieved operating income of 2.18 billion yuan, + 9.5% compared with the same period last year; realized net profit of 430 million yuan, + 56.2% over the same period last year; and deducted 390 million yuan, + 56.2% from the same period last year, mainly due to the rise in volume and price of cement clinker in the main industry. In the first half of the year, there was a net cash inflow of 540 million yuan from operating activities, which was + 19.3% over the same period last year. The company's 20Q2 achieved 1.8 billion yuan in revenue, + 18.9% year-on-year, and 440 million yuan in net profit, + 35.1% in the same period last year. Demand recovered well after the epidemic, and Q2 revenue and net profit reached an all-time high in a single quarter. We continue to be optimistic that the gradual implementation of the off-peak replacement will help to improve the medium-and long-term supply and demand pattern in the company's core market, and it is expected to break the regional price ceiling in the future. We maintain the company's 20-22 EPS forecast of 2.30 EPS 2.66 shock 2.88 yuan, maintaining the "overweight" rating.
The regional demand is high, and the H2 peak season can be expected.
The company's 20H1 sold a total of 6.6 million tons of cement and clinker, + 3.0% year-on-year, mainly due to a large year-on-year increase in clinker sales. If the income and cost of cement clinker accounts for 85%, we estimate that the average price of cement clinker per ton in the first half of the year is 280 yuan, up 17 yuan from the same period last year, thanks to high regional demand and low inventory; the cost per ton is 177 yuan, an increase of 6 yuan over the same period last year; and the gross profit per ton is 103 yuan, up 11 yuan from the same period last year.
The company's 20H1 seller concrete 720000 tons, year-on-year + 12.9%; sales aggregate 2.76 million tons, + 1.1% year-on-year. According to the company's semi-annual report, the company accounts for nearly 50% of the Ningxia cement market, while data from the National Bureau of Statistics show that Ningxia cement production increased by 6.6% year on year in July, down 1.2% from the previous month, with the smallest decline in the off-season in the five northwestern provinces. We expect the company's 20H2 to continue to benefit from the rebound in demand.
Sales / financial expenses decreased significantly compared with the same period last year, asset quality continued to improve the company's 20H1 expense rate of 12.8%, decreased 3.2pct compared with the same period last year, of which the sales / management / financial expense rate was 7.4%, 5.2%, 0.2%, respectively, down 2.0/0.5/0.7pct, and sales and financial expenses decreased by 13.7% and 74.6%, respectively. The company's 20H1 transportation expenses were 96.72 million yuan, down 10.4% from the same period last year, mainly due to the reduction of transportation costs during the epidemic, which was the main factor in the decline in sales costs compared with the same period last year. At the end of June, the company's interest-bearing debt balance was 350 million yuan, down 140 million yuan from the beginning of the year, and the final asset-liability ratio was 21.5%, which was lower than at the beginning of the year by 0.2pct, and asset quality further improved. The balance of accounts receivable at the end of the company's 20H1 was 680 million yuan, a decrease of 20 million yuan compared with the same period last year. While operating income increased by a large margin, accounts receivable decreased.
The management efficiency of the company is expected to continue to improve, maintain the "increase" rating company cement clinker volume and price rise in the first half of the year, the effect of Mengxi peak replacement gradually appears, and the price ceiling in the company's core area is expected to be broken. we are optimistic about the improvement of the medium-and long-term supply and demand pattern in this region. And the company is rich in its own mines and coal resources, the current Wuzhong horse racing 5000 tons of new dry process cement production line project will further reduce unit consumption and labor, the improvement of production costs and management efficiency is expected to drive the overall profitability. We maintain the company's 20-22 return net profit forecast of 110pm 1.27pm 1.38 billion yuan, which currently corresponds to 20-year 7.5xPE and 1.2xPB, with reference to the comparable company's 2020 Wind consensus expectation average 9.8xPE, approving to give the company 20-year 10xPE (pre-value 9-10xPE), with a target price of 23.0 yuan (previous value 20.7-23.0 yuan), maintaining the "overweight" rating.
Risk tips: Ningxia Mengxi cement prices fell sharply, receivables rose sharply.