Beixin Building Materials is an outstanding practitioner of the joint restructuring strategy and is a gypsum board oligopoly enterprise. The company focuses on gypsum board and its supporting keel business. In '23, gypsum board and keel revenue accounted for 61.38% and 10.21% respectively, and gross profit accounted for 79.07% and 6.4% respectively. The company is an outstanding practical example of the joint restructuring strategy of the actual controller China Building Materials Group. While promoting self-construction of production capacity, the company actively expanded joint restructuring to accelerate development. Taishan Gypsum, a high-quality private enterprise holding gypsum board, became the largest gypsum board industry group in China in 2005, became the largest gypsum board industry group in Asia in 10 years, and the company's gypsum board production capacity rose to number one in the world in 12 years and has remained so far. In '23, the company's gypsum board accounted for 67.6% of the national market, ranking as an oligopoly in the industry.
The gypsum board business has deep barriers and is the ballast stone for the company's steady profits and high-quality cash flow. The core support of gypsum board business barriers is: 1) comprehensive cost competitiveness brought about by scale+internal lean management (private vitality of central enterprises) + self-supply of protective paper (industrial chain integration) + national chemical plant layout (reduction of logistics costs); 2) multi-brand layouts such as Dragon Brand (high-end) + Taishan (high-end) +Dream Card (middle and low end) form saturated marketing for the market, with a stable market position, clear price system and strong market control; 3) intensive dealer network and flat channel management provide timely and efficient feedback on market changes. Supported by deep barriers to the main business, the company's profit showed strong resilience and growth strength. The CAGR of revenue and net profit after deduction in April-23 was 14.63% and 23.91% respectively. Over the past 20 years, the net profit cash content remained above 100% for most of the time. Under excellent cash generation capacity, the company's balance ratio continued to decline over a long period of time, from 49.4% in 2004 to 22.6% in 23.
The joint restructuring logic continues to be interpreted, and “two wings in one” build a consumer building materials platform-based enterprise. “Integrated” is gypsum board and gypsum board+ business, and the “two wings” are building waterproofing and coating (industrial+construction), respectively. In terms of waterproof wings, since 19, the company has jointly reorganized leading regional waterproof enterprises such as Shuyang, Yu Wang, Jinthumb, and Saite, and their revenue share has increased rapidly, reaching 17.41% in 23 years. Since '23, the paint wing has also accelerated its layout. The company wholly-owned Lighthouse Coatings (which specializes in industrial coatings) and jointly reorganized Gabriel at the end of '23 to become the 4th largest architectural coatings company in China. Gypsum board+waterproof+paint, consumer building materials platform enterprises have taken shape.
At the end of 23, the company announced its first equity incentive plan since listing. It assessed that the net profit scale of the company withheld from non-return to mother should not be less than 4.264, 6.163, and 6.473 billion, respectively, in 24-26, demonstrating confidence in rapid development.
Profit forecast and investment rating: The company's 24-26 revenue is expected to be 25.18, 28.66, and 32.925 billion, respectively, +12.28%, +13.82%, and +14.88%, respectively, and net profit to mother is 4.328, 4.991, and 5.497 billion, respectively, +22.83%, +15.32%, and +10.12%, respectively. The corresponding PE is 10.99, 9.53, and 8.66, respectively. The company's main business barriers are deep, and the two wings open up room for growth, for the first time The coverage gave it a “Highly Recommended” rating.
Risk warning: demand for completed real estate has declined; the promotion of high-end gypsum board falls short of expectations; raw fuel costs have risen sharply; and the implementation of the “one, two wings” strategy falls short of expectations.