Beijing New Building Materials (000786): Litigation costs drag down performance in 19 years and it is expected to benefit from the completion of recovery
2018 results are lower than expected BeiJing Materials announced 2018 results: operating income of 125.
65 ppm, an increase of 12 in ten years.
5%; net profit attributable to mother 24.
66 ppm, a five-year increase of 5.
2%, corresponding to profit 1.
Excluding the impact of litigation costs in North America, the ten-year growth rate of performance was 10%.
Comments: 1) Production and sales increased slightly in 18 years: the company’s consolidated gypsum board production / sales volume increased by +3 respectively.
1% / 2.
6% to 18.
6.9 billion square meters, of which 4Q4 sales4.
7.8 billion square meters; previously + 29%, -9% MoM.
2) The average price of gypsum board was previously +7.
8% to 5.
85 yuan; 3) The highest gross margin bid.
Due to rising costs, the company’s gross profit margin for gypsum board dropped by -1.
7ppt to 37.
3%; 4Q gross profit margin is the same, shortened by 12 respectively.
4) Taishan Gypsum revenue continues to grow but net profit is substituted: Taishan revenue is twice or more.
2%无锡桑拿网 to 88.
5.4 billion; Taishan returns to mother’s net profit for five years.
6% to 16.
610,000 yuan (67% of the company’s net profit attributable to the mother).
5) Mengpai New Materials Co., Ltd. (formerly Shandong Wanjia) contributed about 10.89 million yuan to the company’s 2018 net profit under the merger caliber.
6) 18-year litigation costs2.
550,000 yuan (a slight drag on performance, litigation costs per +1.
26 trillion, accounting for the company’s net profit attributable to its mother?
10%; about 2 trillion occurred in 4Q, affecting a single season EPS 40% +.
7) The company has achieved net cash at present, with a dividend payout ratio of 31 in 2018.
52%, corresponding to 19e dividend yield?
Development trend The completion area in 19 years is expected to pick up, and the company’s volume and price are expected to benefit.
1 in 19?
The land completion area in February exceeded -11.
9%, lower than market expectations.
However, we expect that under the background of loose credit margins, the growth rate of higher newly started areas in the past two years will accelerate to the completion of this year, and gradually move toward driving downstream and downstream demand improvement after the construction materials such as gypsum board.Volume and price are expected to benefit.
Self-built + acquisition in parallel to further increase market share.
Benefiting from self-built capacity launch and acquisition of Shandong Wanjia, by the end of 2018, the company’s gypsum board capacity had reached 24.
700 million square meters.
At the same time, according to the company’s disclosure, in May 2019, four gypsum board projects in Tianjin, Yiliang, Jiaxing and Jinggangshan with a total production capacity of more than 100 million square meters were promoted for production.
Earnings forecast As we lower the price of gypsum board, we cut the 2019e EPS by 9.
5% to 1.
76 yuan, and earnings per share of 2020e1.
Estimates and recommendations currently continue to correspond.
5x / 10.
4x 19e / 20e P / E, maintain recommendation, temporarily maintain target price of 23 yuan (corresponding to 13).
1x / 12.
7x 19e / 20e P / E) with 14% upside.
Risks: Primary fuels grow faster than expected; gypsum board sales fall short of expectations.