Industry: the demand is blue ocean, and the pattern is optimizing concrete mixing and prefabrication (often refers to commercial mixing). At present, the commercialization rate in China is about 60%. Combined with overseas and domestic industrial reform, there is still room for improvement (commercial mixing rate in central and western cities + prefabrication rate in coastal rural areas). In 2019, the output of commercial and mixed products in China is 2.7 billion square meters, and the estimated space is more than one trillion according to the average price of 400 yuan per square meter, and the actual space is larger when some ready-mixed products are superimposed.
The main features of concrete are as follows: 1. The threshold for entry is not high. The capital threshold is low, the single-line investment is less than 20 million yuan, and the proportion of fixed assets is far lower than that of the general cycle manufacturing industry. 2, the transportation radius is very short. The value of concrete is low, the shelf life is short (easy to solidify), there is a significant transport radius, more "short legs" than cement. 3. The market is scattered and the operating rate is congenitally insufficient. Mixed production mostly changes with the location of downstream projects, it is difficult to concentrate mass production, resulting in a high degree of dispersion of the market. There are more than 10,000 commercial enterprises in China, and the share of leading Chinese building materials is only 4%. The company is the second largest enterprise, with a share of only about 2%. At the same time, the forms of business attached to the lower reaches lead to large fluctuations in demand, so capacity utilization is generally low, with less than 40% in the country in 2020.
Gradual optimization of the pattern. There is a certain degree of dust pollution in traditional mixed production, and under the background of environmental protection control, some small pollution-dispersing enterprises have withdrawn, especially in first-tier cities; at the same time, the rise of administrative examination and approval threshold for new mixing stations has led to a substantial reduction in new construction.
Based on the improvement of hidden concentration and the recovery of downstream profits (increased acceptance of material costs), the price transmission mechanism of the industrial chain has been gradually dredged, especially in the coastal and central core cities such as the Yangtze River Delta.
The company: the leader has a new look, assemble and start again.
The comprehensive competitiveness of the company is more reflected in the operation mode of channels, funds and light assets. 1. The core advantage of the company is that the company has obtained stable orders relying on the channels of the parent company, China Construction. In 2020, the company sold 13 billion yuan to China Construction, accounting for 55% of the total revenue. At the same time, the company's share of China's total construction procurement demand is not high, there is no ceiling at present, so there is great potential for future growth and share increase. 2. At present, the top 10 commercial and mixed enterprises are basically controlled by construction enterprises or cement enterprises. at the same time, the scattered pattern overlays the slow repayment of projects downstream, which leads to a long account period of the industry. in general, small enterprises are faced with strong channel and capital resistance to become bigger and stronger. As the leader of the industry, relying on the advantages of parent company credit endorsement and listing platform, the overall cash flow situation is significantly better than that of its peers, and the credit impairment is very small in history, which is precisely because of this, it has a better financial advantage in the supply of key customers. 3. The company takes the lead in establishing the leading position through integration, and at the same time adopts the light asset leasing base model to constantly open up new areas, and then transforms into mature areas through operation and cultivation for a certain period of time, and constantly circulates to expand the sales scale. it has established the leading position of businessmen in the central and western regions.
In the long run, the company's profit growth has potential and tension. 1. The company locates the central and western regions as the core market, fully benefiting from the strategic layout of national infrastructure to make up for deficiencies. At present, the company's sales cover more than 20 provinces in China, of which Hubei, Sichuan, Xinjiang, Hunan, Guizhou and so on are the core markets, and the profit level is relatively high. At present, from the policy level, the construction of infrastructure deficiency board is expected to give birth to the construction of regional railway public foundation and other infrastructure projects. As the leader of the western market, the company is expected to take the lead in benefiting. 2, based on traditional business and market at the same time, the company is also actively seeking extension, overseas market development + new products such as additives, mortar layout is expected to add a new growth pole for the company in the medium term; 3, under the current industry pattern optimization and downstream profit recovery (price increases to the downstream transmission more smoothly), the company's profitability has also shown a certain marginal improvement.
It is estimated that the company's EPS in 2021 and 2022 will be 0.82,0.95 yuan, corresponding to 10.8,9.3 times of PE, with a buy rating.
Buy rating.
Risk Tips:
1. The demand of mixed merchants has declined greatly in the medium term.
two。 There is great pressure on accounts receivable in the industry.