Event: the company released its annual report in 2020, with an annual operating income of 5.11 billion yuan, an increase of 6.66%, a net profit of 965 million yuan, an increase of 25.49%, and a non-return net profit of 923 million yuan, an increase of 41.61%.
In the fourth quarter alone, the company's revenue was 1.236 billion yuan, an increase of 6.62%, while the net profit returned to its mother was 144 million yuan, a decrease of 10.04%. According to the quarterly report of 2021, the company realized revenue of 575 million yuan, an increase of 51.86%, and a net profit of 2 million yuan, an increase of 110.31%.
Comments:
The product sales volume increased and the comprehensive cost decreased, and the profit increased significantly in 2020: in 2020, the sales volume of the company's main products increased, including 14.5613 million tons of cement, an increase of 1.79%, and 3.1811 million tons of clinker, an increase of 10.96%. We estimate that the average cement price of the company is about 230 yuan / ton, a slight increase of 0.6 yuan / ton over the same period last year; the cost is 154 yuan / ton, which is the same as an increase of 6 yuan / ton, but under the same caliber (excluding the impact of accounting policy adjustment), it is also reduced by 6.7 yuan / ton. In addition, the company's ability to manage and control expenses has been further enhanced. Under the same caliber, the rate of sales expenses has been reduced by 1.31pct to 7.35%; the rate of administrative expenses by 0.53 pct to 5.84%; and the rate of financial expenses by 0.36pct to 0.05%. Along with the decline in comprehensive costs, the company's net profit rate on sales reached 20.53%, an increase of 2.89 percentage points, the highest level since 2011. 2020Q4, the company sets aside 134 million yuan for impairment of assets, mainly for impairment of fixed assets, which has a great impact on the performance of a single quarter.
Strong regional demand, 2021Q1 performance achieved high growth: 2021Q1, the company's operating revenue reached an all-time high, and achieved positive income for the first quarter since 2010, mainly due to the strong demand for cement in the regional market and the continuous improvement of the pattern. In the first quarter of 2021, the average cement price in Ningxia was 324 yuan per ton and the output was 1.884 million tons, an increase of 3.35% and 74.23% respectively over the same period in 2020 and 4.95% and 24.39% respectively over the same period in 2019. The company's performance was driven by the rise in regional cement consumption prices.
With the improvement of the regional market pattern, the leader may benefit from rising prices: the company's cement sales network covers the whole region of Ningxia and surrounding Gansu, Shaanxi and other areas, and the demand is still dominated by infrastructure, so it has a strong continuity. Ningxia market has always been greatly influenced by Mengxi calcium carbide slag cement. With the replacement of staggered peak in Inner Mongolia, the pressure on the surrounding market is also relieved. With the weakening of external shocks, the supply and demand pattern of cement market in Ningxia is expected to continue to improve. As a regional leading enterprise, the company has stronger profit flexibility. The company's cash dividend in 2020 is 320 million yuan (including tax), accounting for 33.20% of the net profit returned to the mother of the year, and the dividend payout rate is stable at more than 30%.
Profit forecast, valuation and rating: based on the expectation of rising product prices, we slightly raised the average price of the company's cement sales for the whole year, and raised the 21-22 year net profit forecast (by 10.98% and 14.38%, respectively). The 23-year homing net profit forecast is 11.32,12.49 and 1.297 billion yuan respectively, corresponding to EPS 2.37,2.61 and 2.71 yuan, so we maintain the "buy" rating.
Risk hint: downstream demand is lower than expected, the price of raw materials rose higher than expected, and the supply side relaxed.