Main points of investment:
Maintain the "overweight" rating. The income of 21H1 reached 3.3 billion yuan, down 2.66% from the same period last year, and the net profit returned to its mother was 600 million yuan, down 17.9% from the same period last year, which is basically in line with market expectations. Taking into account the rising cost of raw fuel and the slow progress of major projects, the eps in 2021-23 will be reduced to 1.94 (- 0.52) / 2.22 (- 0.48) / 2.46 (- 0.54) yuan, and the target price will be revised down proportionally to 15 yuan, corresponding to PE6.7X in 2022.
The progress of infrastructure projects has been slow, and the volume and price of cement have both fallen. It is estimated that the average price of 21Q2 cement tons is about 300 yuan, down about 10 yuan from the same period last year, and the quarterly sales volume is about 7.65 million tons, with a decrease of nearly 700000 tons. We believe that the decline in volume and price is mainly due to the slow progress of key projects in Gansu and Qinghai due to the shortage of funds and the sharp rise in steel prices. According to provincial cement data, Gansu cement output in the first half of the year was 20.18 million tons, down from the same period last year. Qinghai's cement production in the first half increased only slightly by 4.2% compared with the same period last year. We believe that with the pressure signal of economic growth from June to July, fiscal policy is expected to gradually force, the acceleration of major projects in the second half of the year will be a high probability, and the cement demand curve of Gansu and Qinghai is expected to move up.
The rise in coal prices has led to cost pressure. It is estimated that the cost per ton of 21H1 is about 195 yuan, an increase of 15 yuan over the same period last year, mainly due to the higher-than-expected rise in coal prices. In the first half of the year, the gross profit of cement clinker tons is about 100 yuan, down nearly 30 yuan from the same period last year. We believe that with the gradual landing of the national coal supply policy and the reasonable regulation of coal prices, the cost pressure is expected to ease marginally in the second half of the year.
The "net cash" continued and the asset-liability ratio remained at a low level. At the end of the period, the company had cash on hand of about 1.38 billion yuan, far exceeding the interest-bearing liability (450 million yuan). During the period, the financial expenses continued to be negative, while the total asset-liability ratio at the end of the period was about 27.79%, which was nearly 6pct higher than that at the beginning of the year, but still decreased by about 0.87pct compared with the same period last year.
Risk hints: repeated epidemic situation, higher-than-expected increase in raw fuel prices, and less-than-expected promotion of infrastructure projects.