Jidong Cement (000401): Old appearance, new look, high-flying wings

Jidong Cement (000401): Old appearance, new look, high-flying wings

The key points of the report are that the demand is booming, and the medium-to-long term has been continuous. In October 2018, the demand for Beijing-Tianjin-Hebei began to stabilize and rebound, entering a stage of rapid growth.

When is the prospective performance short-lived or stable?

We analyze from two perspectives of population inflow and regional positioning: the continuous inflow of population and the sustained demand of the region.

Reexamine the relationship between cement demand performance and population migration in each region, and find more than two consecutive positive correlations.

Beijing-Tianjin-Hebei is one of the regions with the highest population density in the country, and the population has been increasing continuously in recent years.

Considering the drive of the Xiong’an New District, the trend may continue.

  Xiong’an plans for a century, Beijing-Tianjin-Hebei 南京夜网 integration promotes development.

At the end of 2018, the State Council approved the “Xiongan New Area Master Plan”, which indicates that the construction of the new area may enter the stage of substantial progress.

With reference to Pudong and Shenzhen Special Economic Zone and from the perspective of population density, the construction of the new district can drive 900 cement demand each year.

From another perspective, we believe that in the medium term, the increase in regional demand will depend more on the construction of the transportation network driven by Beijing-Tianjin-Hebei integration.

According to the current regional high-speed rail, highway and other project planning, it is estimated that the construction of key transportation projects in the next two years will drive regional demand, accounting for about 10% of the output in 2018.

  Appearance optimization purifies profits, improves efficiency, and reduces costs. Looking at the optimized Beijing-Tianjin-Hebei region from the perspective of the Yangtze River Delta.

The characteristics of the comprehensive repeated game of cement have made regional bidding synthesis possible, while East China is a model for the improvement of the profit center after the optimization of the competitive layout.

From the perspective of price performance, East China has shown a clear off-season in the past two years, and a more vigorous peak season.

At the beginning of 2019, the reorganization and merger of Jidong Jinye was completed. Compared with the Yangtze River Delta, the concentration of Beijing-Tianjin-Hebei is higher. Although the production capacity of Beijing-Tianjin-Hebei is relatively relatively, considering the peak production and demand recovery, the regional profit center is also expected to improve.

  Exploit the space for improvement of Jidong operation from the cost and expenses.

1) Ton cost improvement depends on variable costs.

The rapid increase in ton cost in recent years is mainly due to the rapid growth of raw materials and fuel power; 2) There is a lot of room for improvement in ton management and financial costs.

The company’s downtime is not much different from Qilian Mountain, etc. There is less room for improvement in management costs due to downtime losses; through the company’s interest-bearing compensation reduction, the ton financial costs may significantly decrease; 3) The integration effect has begun to appear.

The indicators before and after integration, asset-liability ratio, period rate and other indicators were improved.

  Elasticity of profit: volume increase & price increase & cost reduction For cement stocks, demand increase has three aspects to boost performance: 1) Direct sales growth; 2) Price increase after capacity increase; 3) DepreciationDiluted fixed costs have brought down costs.

We calculated based on the profit of Jidong Cement in 2018, and we can see the company’s performance elasticity index.

Based on the judgment of demand and regional pattern, we expect to achieve performance of 30 billion and 36 billion in 2019 and 2020, corresponding to PE of 7.

2, 6.

1x, give Buy rating.

  Risk Warning: 1.

The construction demand driven by Xiong’an New Area is expected to be low; 2.

The Beijing-Tianjin-Hebei market has a low-level development with low expectations.