This report is read as follows:
The company's quarterly results are in line with expectations, and major projects drive the company's commercial concrete sales to continue to grow at a high rate.
Main points of investment:
Maintain the "overweight" rating. 20Q3 achieved an income of 6.615 billion yuan, an increase of 8.87%, a net profit of 350 million yuan, an increase of 15.65%, and a net profit of 340 million yuan, an increase of 13.66%, in line with market expectations. We judge that the landing of major projects will drive the continuous growth of the company's performance, maintain the company's EPS forecast of 0.62,0.72,0.84 yuan in 2020-22, and maintain the company's target price of 15 yuan.
Major projects drive Q3 sales growth to the next floor. The company disclosed that sales in the third quarter reached 1514 million square meters, an increase of 19.61%, which was significantly higher than the 1.21% year-on-year growth rate of Q2. During this period, the company signed contracts for many major projects, such as the Changsha Regional Project of the Central South Branch of the third Bureau of China Construction, and the Lishui District Project of East China Company of the Fifth Bureau of China Construction, among which more than 100,000 square meters of large projects were signed, totaling 1765 million square meters, while the total number of contracts signed by the company reached 3668.7 million square meters, a year-on-year increase of 44.05%. We judge or predict the continuation of the high growth of commercial concrete sales of 20Q4 and even 21H1.
It has achieved remarkable results in reducing the cost and control fees. Affected by the weather of Rain Water, which is rarely seen in the south in a century, the price of concrete has been adjusted in the third quarter. It is estimated that the average price of 20Q3 commercial concrete is about 440 yuan per square meter, which is reduced by about 40 yuan per square meter, while the month-on-month ratio is reduced by about 20 yuan per square meter. However, thanks to the company's optimization of the budget structure, the release of cost reduction and efficiency management and control measures, and increased collection of cement, sand and gravel, the manufacturing cost has decreased significantly, and the estimated 20Q3 gross profit margin is about 14.95%, which is about the same as an increase in 2pct and an increase of about 0.9pct compared with the previous month.
The balance sheet improved. At the end of the period, the company's short-term borrowing was only 420 million yuan, which was about 1.5 billion yuan lower than that of the same period last year, while the long-term loan dropped from 650 million yuan to 34.06 million yuan. The final asset-liability ratio was about 63.56%, a sharp decrease of about 6.67pct compared with the same period last year, and the balance sheet was significantly optimized.
Risk hint: the landing of major projects is lower than expected, and the price of raw materials increases.