Delayed execution of orders and impairment of assets led to lower performance than the business plan. The company has signed a large amount of asphalt supply and marketing contracts in Hunan, Sichuan, Shaanxi and other places in the past 13 years, and the overall order volume has increased significantly compared with 12 years. However, the performance is lower than the business plan of 2.7 billion yuan in the company's 12-year annual report and the operating cost is controlled below 2.57 billion yuan, which is mainly due to the continuous rainfall in Hunan and other places during the peak construction season, resulting in the postponement of some orders to 14 years. At the same time, receivables increased by 92.71% compared with the same period last year, and the provision of bad debts led to a large increase in the impairment of assets, which was also the main factor affecting the small increase in net profit.
The gross profit margin of asphalt is higher than the same period last year. The company completed its reserves before the price of the main raw material matrix asphalt rose, increasing the gross profit margin of the main product general modified asphalt by 4.72% compared with the same period last year; the market for high-strength structural asphalt and waste rubber-plastic modified asphalt promoted since listing was blocked, and the gross profit margin decreased compared with the same period last year; the overall sales gross profit margin was 15.66%, an increase of 2.41% year-on-year, and a net profit rate of 4.46%, an increase of 0.34% over the same period last year.
The traditional asphalt business will grow steadily in the past 14 years, but the rising space is limited. The rapid construction of the national highway network drives the demand of the asphalt market. Since listing, the company has set up branches in Shaanxi, Jilin, Hunan, Sichuan, Xinjiang and Tibet, and the sales volume will increase steadily. The acquisition of Jilin Highway Company can extend the industrial chain down, while increasing the share of the asphalt market in Jilin. It is expected that the contribution performance of the company's asphalt business will grow steadily in the past 14 years, but the highway construction in the central and eastern regions tends to be mature, and the future development space of asphalt business is limited.
14 years to start the process of diversification, into the energy and environmental protection industry. Over the past six months, the company has carried out frequent diversification actions: the establishment of Xinjiang Baoli Petrochemical, benefiting from oil and gas reform and substantial increase in performance; has its eye on the space for the growth of natural gas consumption, plans to acquire natural gas operating assets, and announced the acquisition of 100% stake in environmental protection together on April 8, and there may still be further acquisitions. The company has a clear plan to build the asphalt + oil and gas + environmental protection industry chain in the future, and starting the diversification process can optimize the industrial structure and achieve great-leap-forward development.
Conclusion: the market share of the company's traditional asphalt business is gradually increasing, and the implementation of diversified layout will open up the room for performance growth. The oil and gas and environmental protection industry has a broad market, and the company should enjoy a valuation premium. It is estimated that the company's 14-15 EPS of 0.27,0.34 yuan, the current stock price corresponding to PE26 times, 21 times, maintaining a "highly recommended" rating.
Risk hint: the risk of lagging behind in project construction; the risk of acquisition approval