Tower Group (002233) Annual Report Comment: Regional Supply and Demand Structure is Good
Net profit reached a record high, and the dividend rate remained high. On the evening of March 11, 2019, the company released its 2018 annual report and achieved operating income of 66.
300 million, a year-on-year increase of +45.
3%, net profit attributable to mother 17.
200 million, a year-on-year increase of + 139%, both hitting a record high, but slightly lower than our expectations, the price increase was less than our expectations.
The company strives to achieve a net profit target of more than 2 billion in 2019, a year-on-year increase of 16%.
At the same time, the company announced that it is expected to distribute a cash dividend5.
10,000 yuan, a total of 10 dividends over ten years.
10,000 yuan, the dividend ratio reached 58.
8%, based on the closing price on March 11th, the company’s dividend yield has reached 7%, which is already attractive.
We expect the company to benefit from the construction of the Guangdong-Hong Kong-Macao Greater Bay Area and the strategy of “village revitalization” in 2019. It is expected that the company’s EPS for 2019-21 will be 1.
16 yuan, corresponding to the target price of 13.
90 yuan, maintain “Buy” rating.
The price of 18H2 increased in volume, and the profitability increased month-on-month. In 2018, the company sold cement 1795 sockets, YoY + 16%, which is the increase in the number of first-line cathodes put into operation at the end of 2017.
We calculated that the company’s average price per ton in 2018 was 344 yuan, which was previously increased by 72 yuan, and the net profit was gradually increased to 92 yuan per ton, which was previously increased by 45 yuan. The profitability has significantly improved compared to 17 years. The supply and demand pattern in South China is good and the company’s cost control is stable.
Among them, 1005 samples of cement were sold in the second half of the year, an increase of 27% from the previous month.
However, we estimate that the company’s average ton price in the second half of the year will replace 19 yuan to 336 yuan, which is affected by the high-temperature rain in the third quarter.
In the second half of the year, the ton fee rose by 8 yuan to 25 yuan, of which the management fee rose by 94% from the previous month.
The increase of 87 trillion and long-term deferred expenses resulted in a net profit shift of RMB 25 to RMB 81 per tonne.
The forecast for cement demand in Guangdong province in 2019 is slightly increased, and the supply is controllable. According to the company’s conference call communication, the company judges the real estate demand or orientation in Guangdong in 2019, but benefits from the Guangdong-Hong Kong-Macao Greater Bay Area construction and rural revitalization strategy. It is expected that demand will continue to grow.
According to the 2019 government work report of Guangdong Province, Guangdong Province will increase its efforts to compensate for shortcomings in infrastructure, and expand the investment in key provincial projects by US $ 650 billion, an increase of 8.
3%, while vigorously promoting the Guangdong-Hong Kong-Macao Greater Bay Area construction and rural revitalization strategy.
On the supply side, as of the end of 2019, except for the company’s consolidation of second-tier 400 insertion capacity, there is no additional capacity in Guangdong Province (including capacity replacement projects). We judge that Guangdong Province will still maintain a good supply and demand pattern in 2019, and cement prices may remain high.
The second phase of employee shareholding expands the size of the company, demonstrating the company’s confidence in the future development of the company. The company released the second phase of the employee shareholding plan. In addition to the first phase of directors and supervisors and mid-level management cadres and more than 150 people, the company also added middle-level management technology backbones.About 1,150 people, total or more than 1,300 people, accounting for 43% of the company’s total number of employees.
At the same time, the company also announced the budget of the employee stock ownership plan for 2018-2023, which is implemented in six phases, each of which is independent and has a basic duration of 60 months.
The employee shareholding plan is expected to achieve a win-win situation for employees and the company, showing the company’s development confidence.
Yuedong Cement Leader, maintain “Buy” rating. We estimate that the company’s net profit attributable to its mother in 2019-2021 will be 20/24/26% (the original forecast for 19-20 was 22/24%), YoY + 17% / 17%/ 9%.
Comparable companies have consistently expected a PE of 5 in 19 years.
7x, considering the company’s initial second-line commissioning, given the company a certain evaluation premium, recognized the company’s 8-10xPE in 深圳spa会所 19 (corresponding to a reasonable target price of 13).
90 yuan), maintain “Buy” rating.
Risk warning: The start of major projects fails to meet expectations, and the company’s production capacity is not up to expectations.