2022-05-04 Li Yang of Minsheng Securities Co., Ltd. conducted research on Huaxin Cement and released the research report "Commentary on the First Quarter Report of 2022: Look to the Southwest for Resilience, and "Cement+" for Growth". This report gives a buy to Huaxin Cement Rati

2022-05-04 Li Yang of Minsheng Securities Co., Ltd. conducted research on Huaxin Cement and released the research report "Commentary on the First Quarter Report of 2022: Look to the Southwest for Elasticity, and "Cement+" for Growth". This report gives a buy to Huaxin Cement Rating, the current stock price is 21.8 yuan.

Huaxin Cement (600801)

company released its first quarter report: Q1 achieved revenue of 6.531 billion, +5.52% year-on-year; net profit attributable to the parent company was 672 million, -8.51% year-on-year; net profit attributable to the parent company after non-deduction was 650 million, -10.64% year-on-year. The gross sales profit margin was 26.34%, -6.35 percentage points year-on-year; the net sales profit margin was 10.73%, -2.27 percentage points year-on-year.

comments: Look to the southwest for flexibility, and "cement +" for growth

Look to the southwest for flexibility: The company is the leader in Central China and the Pearl of Southwest. Its cement production capacity is mainly distributed in 9 provinces and cities including Hubei, Yunnan, Hunan, Sichuan and Chongqing, and Tibet. Among them, Hubei and Yunnan have the largest layout, with revenue contributions of 34% and 15% respectively in 2021, and the southwest region accounts for 32% in total. The highlight of the southwest region this year is price elasticity. Let’s take the provincial capital as an example. The average price per ton in Kunming, Yunnan, in the first quarter was 332 yuan, -4 yuan year-on-year. Kunming continued to reduce prices in the second quarter of last year, reaching the lowest level of the year at 280 yuan at the end of July, with a low base. , and it has been raised to 380 yuan at the end of April this year, +60 yuan year-on-year; the average ton price in Guizhou and Guiyang in the first quarter was 492 yuan, a significant +193 yuan year-on-year. Benefiting from peak-shifting production, the price increase at the end of April remained at 160 yuan year-on-year. Yuan.

cost and expense performance: Q1 sales expense rate was 5.16%, -2.42 percentage points year-on-year, sales expenses were +2.11% year-on-year; R&D expense rate was 0.12%, +0.06 percentage points year-on-year, R&D expenses were +95.69% year-on-year, mainly due to environmental protection and new material research and development Investment increased; the administrative expense rate was 5.39%, -0.77 percentage points year-on-year, and the administrative expense rate was -7.55% year-on-year; the financial expense rate was 0.88%, +0.31 percentage points year-on-year, and the financial expense rate was +64.04% year-on-year, mainly due to the increase in exchange losses. The asset-liability ratio was 43.20%, compared with 40.04% in the same period last year. Short-term borrowings were 708 million yuan, an increase of 65 million yuan from the end of 2021, and long-term borrowings were 5.654 billion yuan, an increase of 572 million yuan from the end of 2021.

Cash flow performance: The net cash flow generated from operating activities in Q1 was -319 million yuan, mainly due to the sharp increase in fuel prices and the increase in cash for payment of goods; the net cash flow generated from investing activities was -1.196 billion yuan, mainly due to aggregate and concrete projects Investment increased; net cash flow generated from financing activities was 641 million yuan, mainly due to an increase in project borrowings.

Other concerns: investment income dropped significantly by 231.81%, mainly due to the decrease in income from associates; non-operating income dropped by 89.18%, mainly due to the decrease in long-aging debt write-offs; long-term receivables increased significantly by 213.78%, mainly due to the promotion of new projects and the Local governments provide long-term working capital; income from changes in fair value increased significantly by 618.33%, mainly due to changes in the fair value of derivative financial instruments.

looks at "cement +" for growth: this year the company plans to sell 18.07 million cubic meters of concrete (+100% year-on-year), 78.22 million tons of aggregates (+124% year-on-year), and has a total environmental protection business disposal revenue budget of 37 billion yuan (+14% year-on-year) ).

investment advice: On the one hand, "stable growth" has moved from expectations to implementation, and comprehensive infrastructure construction has begun. On the other hand, the epidemic situation is gradually easing, market recovery is accelerating, and cement demand is accelerating. In addition, the company has cultivated and grown from multiple dimensions including aggregates, environmental protection, concrete, and overseas. We estimate that the company's net profit attributable to the parent company in 2022-2023 will be 6.38 billion and 7.18 billion respectively, and the corresponding dynamic PE of the closing price on April 29 will be 7 and 6x, maintaining the "recommended" rating.

Risk warning: Policy advancement is less than expected; overseas investment environment is unstable; epidemic control is less than expected.

Securities Star Data Center calculates based on the research report data released in the past three years. Everbright Securities researcher Sun Weifeng's team has conducted more in-depth research on this stock. The average forecast accuracy in the past three years is as high as 95.6%. It predicts that the attributable net profit in 2022 will be a profit of 59.94 billion, the predicted PE based on current price conversion is 7.62. The latest profit forecast details of

are as follows:

A total of 20 institutions have rated the stock in the past 90 days, 16 have buy ratings, and 4 have overweight ratings; the average target price of institutions in the past 90 days is 25.46. The Securities Star valuation analysis tool shows that Huaxin Cement (600801) has a good company rating of 4 stars, a good price rating of 4 stars, and a comprehensive valuation rating of 4 stars. (Rating range: 1 ~ 5 stars, the highest is 5 stars)

The above content is compiled by Securities Star based on public information. If you have any questions, please contact us.