Incident: Recently, the company announced its 2023 annual report. The company's revenue for 2023 was 33.8 billion yuan, +10.8% year over year; net profit to mother was 2.8 billion yuan, +2.3% year over year; net profit without return to mother was 2.3 billion yuan, -10.0% year on year.
The company's 23Q4 revenue was 9.6 billion yuan, +10.8% YoY; net profit to mother was 890 million yuan, +87.2% YoY.
The company plans to pay out 0.53 yuan (tax included) per share and maintain a dividend rate of around 40% for 5 consecutive years.
Comment:
The aggregate and concrete business continues to grow at a high rate and has become the company's pillar business.
In terms of sales, the company sold 61.9 million tons of cement clinker in 2023, +2.5% year-on-year. In terms of cement price and gross profit, the average price of the company's cement clinker ton in 2023 was -29 yuan, to 311 yuan, of which 23H2 was -34 yuan, to 298 yuan; the cost of a ton of cement clinker was -26 yuan to 231 yuan, which greatly hedged the impact of the decline in the price of a ton of cement; the gross profit of a ton of cement clinker for the whole year was -3 yuan to 81 yuan year on year.
In addition to the cement clinker business, the company's aggregate and concrete business continued to grow at a high rate. Revenue in 2023 was 5.4 billion yuan and 7.7 billion yuan, respectively, +75% and +49%, respectively; gross margins of the aggregate and concrete business in 2023 were 46% and 15%, respectively, -9.4pct and -0.3pct, respectively. Revenue from other businesses (including environmental disposal, etc.) was 1.5 billion yuan, -13% year on year, gross margin was 25%, which was basically the same year on year. The total disposal volume of the company's environmental protection business in 2023 was 3.5 million tons, +6% year over year. In 2023, the company's non-cement clinker business revenue and gross profit accounted for 43% and 44% respectively. We believe that the non-cement business is expected to form the company's second growth curve.
The 23Q4 company recorded asset disposal revenue of 420 million yuan. The main company stored industrial land in Qingshan Town, Qingshan District, Wuhan, which significantly increased profits in the single quarter, but was partially offset by asset impairment losses of 130 million yuan.
Maintain an “better than the market” rating. We believe that under the strong capital expenditure plan in the early stages, the company will continue to grow its overseas cement and aggregate mixed business in the future. We expect the company's EPS from 2024 to 2026 to be 1.68, 1.91, and 2.17 yuan/share, respectively, giving the company 10-12 times PE in 2024, with a reasonable value range of 16.80 to 20.16 yuan/share.
Risk warning. Demand for real estate infrastructure fell short of expectations; additional production capacity exceeded expectations.