Events:

The company releases its quarterly report for 2021. In the first quarter of 2021, the company realized operating income of 575 million yuan (+ 51.86%), net profit of 1.7492 million yuan (+ 110.31%), and non-return net profit loss of 5.4809 million yuan (+ 85.03%).

Comments:

The company's performance turned from loss to profit in the first quarter, and the volume and price of its products rose. The company turned a loss into profit in the first quarter of 2021. On the one hand, benefiting from the rise in cement prices and product sales in Gansu and Ningxia, the company's operating income increased by 51.86% compared with 20Q1 and 21.05% compared with 19Q1. On the other hand, although the cost of freight is included in the cost under the new accounting standards, the company's scale effect is more significant. as a result, the increase in operating costs is less than operating income. The operating cost rates of Q1 in 21 years, Q1 in 20 years and Q1 in 19 years are 100.65%, 118.57% and 113.92%, respectively.

Cost control has been effective and the net interest rate has risen steadily. The company's continued cost control has led to a rise in net interest rates. In the first quarter of 2021, the sales / management / finance / R & D expense rates were 1.39% (- 11.16pct), 10.36% (- 10.50pct), 0.35% (- 0.25pct) and 0.43% (+ 0.31pct), respectively, and the total expense rate for the period was 12.52% (- 21.61pct). The net profit rate of 21Q1 sales is 1.03%, which is higher than that of 20Q1 and 19Q1 by 4.49pct and 11.57pct respectively.

Investment suggestion: as the cement leader in Ningxia, the company benefits from the policy of peak replacement, the regional supply pattern is improved, and cement prices are on the rise. At the same time, the company continues to control costs and is expected to further increase its profits in the future. It is estimated that the return net profit of the company from 2021 to 2023 is 1.379 billion yuan, respectively, and the corresponding PE is 5.74, 5.08 and 4.56 times, respectively, and the company's net return profit from 2021 to 2023 is estimated to be 1.379 billion yuan, respectively.

Rating.

Risk hint: the risk of coal price fluctuation, the deterioration of regional supply pattern, and the lower-than-expected demand growth.