Incident: The company released its 2022 annual report. In 2022, it achieved operating revenue of about 19.9 billion yuan, a year-on-year decrease of 5.49%, a year-on-year net profit of about 3.14 billion yuan, a year-on-year decrease of 10.71%, after deducting net profit of about 2.62 billion yuan from non-homo, a year-on-year decrease of about 23.39%. It is proposed to distribute a cash dividend of 6.55 yuan (tax included) for every 10 shares to all shareholders.
Real estate capital is tight, and sales are under pressure due to repeated epidemics. Due to tight real estate funding and repeated epidemics in 2022, completion in 2022 fell 15% year-on-year. Furthermore, we expect commercial, catering, and office decoration to be dragged down to varying degrees by the pandemic. Affected by these factors, industry output fell from 3.51 billion square meters in 2021 to 3,073 billion square meters in 2022.
The price increase against the trend shows a deep moat. The gross profit margin of a single plasterboard flat has remained stable, and the gross margin of the keel has bucked the trend.
1) Demand declined significantly in 2022. However, with the help of its own deep moat and high market share, the company bucked the trend and raised the average price of gypsum board from 5.8 yuan/square meter in 2021 to 6.4 yuan/square meter, which guaranteed the stability of the gross profit of a single plasterboard flat against the backdrop of obvious increases in the cost of coal, etc.
2) The company's revenue from the keel business fell 8.7%, less than the decline in gypsum board sales. We expect the support rate to continue to increase. With the help of strong gypsum board channels, the gross margin of the keel business increased from 18.4% in 2021 to 18.9% in 2022, which is also a reflection of the company's moat.
The dividend rate increased slightly. In the process of building a valuation system with Chinese characteristics, it is inseparable from the competitiveness of central enterprises themselves and the improvement of capital market returns. We estimate that the dividend rate shown in the company's 2022 dividend plan is about 35.3%, a certain increase from 31.5% in 2021. We believe that in a context where the market share of gypsum board is already high and the cash flow is excellent, the company has the conditions to increase the dividend ratio in order to achieve a two-way flow with the capital market, thereby realizing the construction of a valuation system with Chinese characteristics.
Maintain a “better than the market” rating. Looking at the medium to long term, the development of small enterprises is limited in the context of environmental protection. With the company's integration of the industry and optimization of the market pattern, the company's profit center is expected to continue to improve. At the same time, the domestic gypsum board layout is further improved and the market share continues to increase. Globalization and the company's dividend rate has increased. We expect net profit of 41.99, 48.33, and 5.639 billion yuan respectively from 2023 to 2025 (originally 3.870, 5179 and 5.777 billion yuan), corresponding to EPS of 2.49, 2.86, and 3.34 yuan/share respectively. We will give the company 20 times PE in 2023 (originally 20 times PE in 2022), with a corresponding target price of 49.80 yuan (originally 45.80 yuan), maintaining the “superior market” rating.
Risk warning. Demand fell more than expected, and the new production capacity of gypsum board exceeded expectations.