Steady growth in income and rising coal prices are a drag on performance. 2022Q1 achieved revenue of 929 million yuan, year-on-year + 19.37%, net profit of 2.8038 million yuan, year-on-year-94.01%, non-return net profit of 6.6673 million yuan, and 0.0036 yuan per share of-82.35%, basically in line with the previous performance forecast. Affected by the COVID-19 epidemic, the company's Q1 cement sales decreased compared with the same period last year, but benefited from the regional cement prices upward year-on-year, revenue achieved steady growth, but due to the rise in raw coal prices, the performance declined significantly compared with the same period last year.

Profitability fell under pressure, and cash flow rose sharply compared with the same period last year. 2022Q1's comprehensive gross profit margin is 16.37%, year-on-year-8.98pp, month-on-month-4.06pp, mainly affected by the rise in raw coal purchase prices, net profit rate 0.15%, year-on-year-6.13pp, month-on-month + 0.83pp, net profit margin is less than gross margin mainly due to continued good cost control. The expense rate during the period is 13.10%, year-on-year-3.41pp, month-on-month-2.28pp, of which the sales / management / financial expense rate is 1.32%, 11.84% and 0.05%, respectively, year-on-year-0.14pp/-3.37pp/+0.10pp, month-on-month-0.37pp/-1.62pp/-0.3pp, and the decrease in management costs or due to the impact of the epidemic, fixed assets maintenance costs occur less. 2022Q1 realized net cash flow of 508 million yuan from operating activities, + 110.56% from the same period last year. On the one hand, it benefited from the increase in sales revenue over the same period last year, and on the other hand, due to the increase in the proportion of corporate bills settlement, the cash outflow decreased. 2022Q1 notes payable was 570 million yuan, an increase of 189 million yuan over the same period last year, and + 49.6% compared with the same period last year.

Plan major asset restructuring and pay attention to the progress of the follow-up plan. On April 25, the company announced that it had signed a "significant Asset restructuring intention Agreement" with China Communications and Construction and China Urban and Rural holding Group. It is proposed to carry out a major asset restructuring to replace all the company's assets and liabilities with the 100% equity of the Public Regulation Institute, the first Court and the second Court held by China Communications and Construction, and the equivalent portion of the 100% equity held by China's urban and rural areas in the Southwest Court, Northeast Court and Energy Institute. Insufficient replacement of some companies will issue shares to China Construction, China's urban and rural purchases, and raise supporting funds at the same time. This transaction is still in the early planning stage, the parties involved in the transaction have not yet signed a formal transaction agreement, and the specific transaction plan is still under discussion and demonstration.

Risk hints: raw coal prices have risen sharply; infrastructure projects have fallen short of expectations; the restructuring process is uncertain; investment suggestions: stable growth is expected to provide performance flexibility, valuation has a safety margin, and maintain "buy"

In view of the great uncertainty of the company's asset restructuring plan at present, the analysis of the future investment prospect is still based on the original business. The company is the leading cement company in Gansu-Qinghai-Tibet region. Gansu / Qinghai has a market share of 45% and 23% respectively, and occupies a dominant position in key engineering markets such as highways, railways and airports. Under the background of steady growth, regional infrastructure investment is accelerated or regional demand picks up. At the same time, new aggregate production lines in Chengxian and Pingliang have been put into production, and the development of aggregate business is expected to contribute to new performance growth. It is estimated that in 22-24, the EPS will be 1.38, 1.49, 1.58 yuan per share, respectively, and the corresponding PE will be 7.7, 7.2, 6.8x, maintaining the "buy" rating.