The company released its interim results of 2023, KuaiBao, with revenue of 10.804 billion yuan in the first half of the year, a decrease of 8.88%, a net profit of 165 million yuan, a decrease of 56.82%, and a non-return net profit of 144 million yuan, a decrease of 56.30%. In the first half of the year, the company covers the area where mixed prices are obviously down, which puts pressure on the company's performance, but the company pays more attention to it, and its profitability is expected to rise steadily. Maintain the company's buy rating.
Support the main points of rating
The performance is under pressure, and the net profit of returning to the mother has dropped greatly. 2023H1 achieved a revenue of 10.804 billion yuan, a decrease of 8.88%, and a net profit of 165 million yuan, a decrease of 56.82%. 2023Q2 achieved a revenue of 6.741 billion yuan, a decrease of 6.01%, and a net profit of 226 million yuan, a decrease of 34.53%. The company's performance was under pressure in the first half of the year, and its net profit fell sharply.
23H1's mixed sales were flat year-on-year, but the unit price fell sharply. The number of contracts signed by 2023H1 Company was 59.2403 million square meters, with a decrease of 8.36 percent, and the sales volume was 2635.15 million square meters, an increase of 0.16 percent. The number of contracts signed by 23Q2 Company was 3980.77 million square meters, with a decrease of 5.71 percent, and the sales volume was 1642.51 million square meters, an increase of 0.61 percent. Considering that the company's mixed income accounts for about 98%, we estimate that the unit price of commercial concrete of 23H1 Company is about 402 yuan per square meter, with a reduction of 40 yuan per square meter. Among them, the unit price of 23Q2 company is about 402 yuan per square meter, which is 28 yuan lower than the unit price level of 22Q2. The sales unit price of commercial concrete decreased significantly in the second quarter and the first half of this year.
The main reason for the low demand for 23H1 concrete or the decline in sales unit price. The new construction area of 2023H1 real estate totaled 499 million square meters, a decrease of 24.3%, while the growth rate of completed infrastructure investment remained high, 10.2% compared with the same period last year. However, in the first half of the year, China's cumulative cement output increased only slightly by 1.3% compared with the same period last year, indicating to a certain extent that the physical workload of infrastructure construction in the first half of the year is still lower than expected, and the demand for cement and concrete has not yet recovered significantly. The main factors for the relatively low demand for concrete or the decline in the unit price of commercial and mixed sales.
The company pays more attention to it and its profitability is expected to rise steadily. 1) the company is the only commercial platform under China Construction Group, and the commercial concrete provided to China Construction Group accounts for a low proportion of the total commercial concrete it needs, and there is still much room for improvement. 2) recently, the Ministry of Urban Village Reconstruction and the Ministry of Housing and Construction have issued favorable policies to stabilize the construction industry and real estate, which is expected to promote the stable and healthy development of the real estate market; the backlog of infrastructure projects is also expected to start in the second half of the year, further boosting demand for businessmen.
3) the company introduces Anhui Conch Cement as a strategic investor, and the cooperation between the two sides will reduce the purchasing cost of raw materials and help the company expand the market. 4) the company continues to promote the regional strategy, and the expansion of the new regional business scale is expected to play a scale effect and further enhance profitability.
Valuation
Considering that the recovery of demand in the second half of the year remains to be seen, we have partially lowered our profit forecasts. It is estimated that the company's revenue from 2023 to 2025 will be 248.1, 262.1 and 28.26 billion yuan, the net profit will be 4.6,8.1 and 980 million yuan, and the EPS will be 0.37 yuan, 0.64 yuan and 0.78 yuan respectively.
Main risks faced by rating
The landing of infrastructure is not as expected, the effect of business expansion is not as expected, and the effect of strategic cooperation is not as expected.