A leading domestic gypsum board company, equipped with two wings in one global layout. Beixin Group Building Materials Co., Ltd. is the world's largest gypsum board keel industry group. As of 2022, the Group's gypsum board production capacity was 3.358 billion square meters, and gypsum board production and sales accounted for 68.11% of the industry. In 2019, the company sorted out and determined the development strategy goal of “one, two wings, global layout” to accelerate the waterproofing and coating business while continuing to focus on the main gypsum board business.
The gypsum board market is clearly structured, and the brand effect is obvious. The broadening and superposition of downstream application scenarios and future easing of real estate policies is expected to boost demand. At this stage, the gypsum board industry is divided into three types of markets: high, middle, and low end. The industry concentration is high, and policies catalyze large-scale enterprises, and future industry mergers and acquisitions and integration will accelerate. The brand effect in the industry is obvious. Consumers are less price sensitive, and it is easy to accept price changes and brand premiums for gypsum board. As policies vigorously promote the implementation of prefabricated buildings and stricter green policies, demand for gypsum board is expected to benefit. At the same time, relaxed real estate policies help improve completed area, new houses drive a steady increase in demand for gypsum board, and secondary housing renovation creates sustainable demand on the C-side. Marginal easing of real estate policies is expected to drive the expansion of the gypsum board industry.
Overall finance is stable, moderate and positive, gypsum board business has significant advantages, and waterproof coatings are working together.
In recent years, the company's gross sales margin has remained around 30%, and the net sales margin, ROA and ROE performance has remained at 15-20%/10-15%/15-20%, and profit earnings performance has been rising steadily. From 2019 to the third quarter of 2023, the company's balance ratio fell from 32.25% to 23.89%, the current ratio rose from 1.02 to 2.45, and the quality of the asset structure was optimized year by year.
Gypsum board: Thanks to Beixin's outstanding advantages in product brands and raw material costs. Adopting a multi-brand strategy, the competitors for high-end products are only three major foreign investors (Saint-Gobain, Knauf, Ushi Gibolo), and the competitive pattern is excellent. Reduce raw material processing costs, and reduce procurement costs and transportation costs through a nationwide production capacity layout.
The “two wings” business collaborated and developed rapidly. Beixin entered the waterproofing industry in 2019. From 2019 to 2022, the waterproof business revenue increased from about 200 million yuan to 3,058 billion yuan, and the CAGR was as high as 146.11%, gradually building a complete product matrix. In 2023, the company successfully acquired 78.34% of Gabrielle's shares. Currently, international building materials giants have achieved rapid expansion through acquisitions. The company relies on endorsement as a central enterprise, so that the target company can quickly receive support in terms of channel sales, customer resources, etc., to further expand domestic and foreign markets, enhance brand value and Market share.
The company was given an “increase in holdings” rating. The company is expected to achieve net profit of 35.58/40.68/4.989 billion yuan in 2023-2025 (without considering the impact of the merger), EPS of 2.11/2.41/2.95 yuan, and the corresponding PE is 13.30/11.64/9.49 times.
Risk warning: Risk that downstream demand falls short of expectations, raw material prices change drastically, industry supply patterns change, and profit forecasts and valuations fall short of expectations.