20 years of rapid growth in performance, maintaining a "buy" rating
The company released its 20-year annual report on the evening of March 18, with a revenue of 5.11 billion yuan in 20 years, a net profit of 965 million yuan in YOY+6.66%, and a net profit of 923 million yuan in YOY+25.49%, YOY+41.61%. The company's 20Q4 realized revenue of 1.236 billion yuan, + 6.62% year-on-year, and net profit of 144 million yuan,-10.04%, compared with the same period last year. The profit growth mainly benefits from the stable volume and price of cement clinker and the effect of cost control. The steady growth of solid investment in Ningxia, where the company is located, and the gradual implementation of Mengxi peak replacement will help to improve the medium-and long-term supply and demand pattern in the company's core market, and is expected to break the regional price ceiling and maintain the "buy" rating in the future.
The sales volume has increased slightly in the past 20 years, and the growth in the core region is obvious.
From a regional point of view, the company's revenue in Ningxia Autonomous region has increased by 20.6% year on year in the past 20 years, which is significantly higher than-4.4% outside the autonomous region. We expect to benefit mainly from the increase in prices over the same period last year. Due to the implementation of off-peak replacement, the regional supply and demand pattern has been improved, driving cement prices to improve. The company sold 17.7424 million tons of cement and clinker in 2020, an increase of 3.32 percent over the same period last year, of which cement sales were 14.5613 million tons, an increase of 1.79 percent over the same period last year. We estimate that the average cement price of the company in the past 20 years is 230 yuan, which is almost the same as the same period last year, with a cost of 154 yuan per ton, an increase of 6 yuan over the same period last year, mainly due to the carry-over of sales expenses to the cost, excluding 141 yuan per ton, down 7 yuan from the same period last year. mainly due to the decline in coal prices led to a decline in fuel costs, and finally achieved a gross profit of 76 yuan per ton, down 6 yuan from the same period last year. As of last Friday, the cement price in Ningxia was 360 yuan / ton, 30 yuan higher than the same period last year. We believe that the introduction of the 20-year Mengxi peak replacement program will help to reduce the impact of low-price calcium carbide slag cement on Ningxia and Mengxi region, and the regional cement price is expected to be repaired.
The expense rate decreased, the capital structure continued to optimize, the cash flow continued to grow, and the company continued to strengthen expense control. During the 20-year period, the expense rate decreased 8.7pct compared with the same period last year, in which the sales / management / financial expense rate was-7.8/-0.5/-0.4pct, respectively. The decline in sales expense rate was mainly due to the adjustment of transportation expenses to operating costs. At the same time, the company strengthened internal management, and the management expenses were further improved. The decline in the rate of financial expenses is mainly due to a decrease in interest-bearing liabilities. We estimate that the company's interest-bearing liabilities at the end of the year were 430 million yuan, down 12.2% from the same period last year. At the end of the year, the company's asset-liability ratio was 19.36%, a year-on-year decline of 2.3pct, and a decline for six consecutive years. For the whole year, the net inflow of operating cash flow was 1.09 billion yuan, an increase of 10.31% over the same period last year, and the cash flow increased further.
Ningxia cement faucet is expected to benefit from the improvement of regional supply and demand pattern.
The company is the cement leader in Ningxia, with a regional market share of 37%. With the replacement effect of Mengxi peak replacement gradually emerging, we believe that the regional cement price ceiling is expected to be broken, while the company continues to promote cost reduction and efficiency, driving profitability. Due to the lower-than-expected volume and price growth in 20 years, we adjusted the company's 21-22 return net profit to 1.13 billion yuan (the previous value was 1.22 billion yuan), and increased the 23-year return net profit forecast of 1.47 billion yuan. With reference to the comparable company valuation, we gave the company a 21-year 8-fold target PE, corresponding to the target price of 18.96 yuan, and maintained the "buy" rating.
Risk hints: the regional supply pattern deteriorates, the implementation of off-peak replacement is not as expected, and the downstream demand growth is not as expected.