This report is read as follows:

The volume and price of the cement plate is expected to be repaired, and the profitability of the real estate sector is about to hit bottom.

Main points of investment:

Maintain the "overweight" rating. The company issued an annual report on revenue of 108.005 billion yuan in 2020, an increase of 17.61%, and a net profit of 2.844 billion yuan, a decrease of 23.01%, in line with expectations. Considering that the profit space of the real estate carry-over project in 2021 may remain under pressure in the short term, the company's EPS forecast for 2021-2023 is 0.34 (- 0.03,0.37) and 0.41 (new forecast), but the company's core area Beijing-Tianjin-Hebei region is full of long-term potential, and the company's internal integration optimization is gradually improved, so it maintains the target price of 4.77 yuan. The corresponding PE from 2021 to 2023 is 14.03, 12.89, 11.63 times, maintaining the "overweight" rating.

The cement plate is expected to be repaired. It is estimated that the sales of Q4 cement clinker of about 35 million tons increased by 35% compared with the same period last year, which was contributed by regional construction speed and environmental protection flexibility. It is estimated that the ex-factory price of Q4 company is about 338 yuan, and the gross profit per ton is about 120 yuan. The reduction of management costs leads to a net profit of 44 yuan per ton, which is nearly 20 yuan higher than the same period last year.

Under the low base and high regional prosperity expectations, volume and profit margins in 2021 are expected to continue to be repaired.

Real estate profit margins are expected to hit bottom. The company's real estate carry-over income of 31.3 billion yuan in 2020 increased by 41%.

But the gross profit created is only about 4.5 billion yuan, with a reduction of 40%. It is mainly affected by the project structure and high land price. It is judged that the real estate carry-over profit margin will gradually hit bottom in 2021 and begin to pick up in 2022.

Home and property sectors are expected to improve profitability. The revenue of the home building materials sector increased by 34% with a revenue of about 33 billion yuan in 2020, with a gross profit of 929 million yuan with a decrease of 358 million yuan, while the property sector with a revenue of 4.778 billion yuan with a decrease of 5%, and a gross profit of 2.5 billion yuan with a decrease of 218 million yuan. It is judged that recurrent profit and loss should maintain negative growth, but the base of impairment provision in 2019 is relatively large, so the final decline in sector performance is limited, and the profits of the two sectors will improve in 2021 when the business boom and impairment provision are sufficient.

Risk tips: raw material cost risk, domestic monetary policy real estate policy risk.