The company issued a 2022 performance forecast on January 9, with an estimated net profit of 13.5-1.52 billion yuan in 2022, a decrease of 45.91% by 51.96%. Under the condition of falling volume and price and high cost, the company's profits are under obvious pressure.
The 23-year supply and demand situation is expected to improve, looking forward to the company's performance repair and maintain the buy rating.
Support the main points of rating
22Q4's profit is negative. It is estimated that the net profit of 2022Q4 will be 13.5-1.52 billion yuan in 2022, with a decrease of 46% and 52%. According to the median calculation, the net profit of 2022Q4 will be 199 million yuan, with a decrease of 1.189 billion yuan.
Supply and demand are weak, inventory is overstocked and profits are narrowed. The growth rate of infrastructure construction is relatively high in 2022, but the actual workload and driven cement demand have lagged behind; the real estate demand has declined more; the national cement production has dropped more than the same period last year, and the storage capacity pressure of cement enterprises is relatively high; the high cost of coal has further weakened the company's profits.
It is expected to achieve a rise in both volume and price in 2023, and it is recommended to remain relatively optimistic. With the further improvement of the tacit understanding of the industry, cement prices are expected to continue to rise, leading to the gradual stabilization of industry benefits: 1) expanding domestic demand has become an important pillar of stable growth strategy. Infrastructure and real estate investment is expected to continue this year, and the probability of further decline in cement demand in 2023 is expected to be small.
2) with limited new production capacity in 2022, the industry has entered a new round of rebalancing process after short-term disorderly competition, optimizing the pattern or pushing prices slightly higher. 3) the fluctuation of coal price may be limited, and under the background of cost stabilization, it is worth looking forward to the rebound of the company's profit margin.
Market integration creates opportunities, and northern leaders show resilience. Jidong cement announced on December 7 and Tianshan shares invested in the establishment of a joint venture company to promote the optimization of the market pattern in Northeast China, including Liaoning. The cement price in North China is relatively stable in the first half of 2022, which shows the toughness of Jidong cement as the leader in the north. In the future, by continuing to promote market integration and enhance the regional market share and industry coordination, it is expected to support the company's performance recovery.
Valuation
Considering that 22Q4 performance is still under pressure, with reference to the company's performance forecast, we downgrade our profit forecast. It is estimated that the company's income from 2022 to 2024 is 321.9 yuan, 332.0 yuan and 34.4 billion yuan, the return net profit is 14.7 yuan, 19.9 yuan and 2.65 billion yuan respectively, and the EPS is 0.55 yuan, 0.75 yuan and 1.00 yuan respectively.
Main risks faced by rating
Coal prices continue to rise, the recovery of real estate demand is not as expected, and the implementation of off-peak production is not as expected.