What happened: the company recently released its annual report that the company achieved operating income of about 5.11 billion yuan in 2020, an increase of about 6.7% over the same period last year, and a net profit of about 960 million yuan, an increase of 25.5% over the same period last year. At the same time, the company announced that it would pay a cash dividend of 6.7 yuan (including tax) to all shareholders for every 10 shares.
Comments:
Demand in the region is strong, and sales are growing under the epidemic. The company's production line layout in Ningxia, Gansu, Inner Mongolia and other places, the regional market performance in 2020, revenue in the region increased by 21%, revenue outside the region fell slightly by 4%. The demand in the autonomous region enabled the company to shake off the impact of the epidemic, and cement clinker sales increased by 4% to 15.86 million tons in 2020.
The revenue per ton was flat and the high increase in sales led to a sharp decline in the cost per ton.
1) although the proportion of clinker sales with lower prices increased in 2020, thanks to the strong cement prices in Gansu and Ningxia in the second quarter, the company's income per ton of cement clinker in 2020 was about 257 yuan per ton, down only 1 yuan per ton compared with the same period last year.
2) benefiting from the substantial increase in sales volume, the company's ton cost has dropped sharply. Due to the adjustment of accounting policy (freight in 2020 is included in the cost), we examine the index of ton cost + sales expense. In 2020, the company's cement clinker ton cost + sales cost is about 175 yuan / ton, a sharp drop of 18 yuan / ton compared with the same period last year. 3) in 2020, the company's ton management (including R & D) and financial expenses were 19 and 0.1 yuan per ton respectively, down 1 and 1 yuan per ton compared with the same period last year, and the financial expenses were almost zero.
4) through the above analysis, cost compression is the biggest driving force of the company's performance growth, and the company's net profit per ton increased by 10 yuan to 61 yuan per ton.
Maintain the "better than the market" rating. With the spillover of prosperity in Gansu, stricter management of carbide slag cement in Inner Mongolia and reduced impact of low-price cement, we expect the regional landscape to continue; the company's Wuzhong Racing 5000t/d production line ignited in 2020 and contributed to profit increment in 2021; the first step of cement asset integration under China Building Materials has been put forward, and the follow-up will continue to promote the reorganization and integration of the cement business sector, step-by-step implementation and implementation of commitments. We estimate that the return net profit of the company from 2021 to 2023 is about 11.1,12.2 and 1.29 billion yuan, and the EPS is about 2.33,2.55 and 2.70 yuan per share, respectively. The company will be given 10 times of PE in 2021, with a reasonable value range of 18.64 yuan and 23.30 yuan (corresponding to 1.23 times PB in 2021).
Risk hint. Coal prices rose higher than expected; infrastructure investment fell short of expectations.