Beijing New Building Materials (000786): Contrarian growth potential

Key points of the report Event description BeiJing Materials released its 2018 annual report: It achieved operating income of 125 in 2018.

65 ppm, an increase of 12 in ten years.

5%, attributable net profit of 24.

66 ppm, a five-year increase of 5.

2%.

Incident Comment The sales of gypsum board increased slightly, which was evident under weak demand.

The company achieved sales of gypsum board in 2018.

6.9 billion square meters, an increase of 10 years.

64%.

As demand for gypsum board was suppressed last year due to sluggish completion and other factors, we judge that the overall sales volume of the industry may show a negative growth trend.

Against this background, the contrarian growth of Beixin’s sales has fully demonstrated the demand, and the market share is expected to further increase.

The rapid growth of the keel business has become a new growth point for the company.

The company’s keel business realized revenue in 201811.

30,000 yuan, an increase of 26.

85%.

Considering that the market for keel supporting gypsum board is vast, and the downstream customers’ requirements for keel quality are gradually increasing, the company is expected to use its own brand advantages and channel advantages to achieve its own keel business volume and contribute new growth points.

The impact of alternative lawsuits, the company’s attributable net profit increased by 10 in 2018.

03%.

For the first time, the settlement of the Amorin multi-region merger lawsuit has progressed (the case settlements are all independent cases outside the multi-region merger lawsuit). Taishan estimates that the maximum settlement amount will be 2771.

USD 40,000, the settlement coin was reflected in the company’s statement at one time, affecting 2018 net profit1.

900 million.

Adding legal fees and travel expenses related to litigation, etc., will affect the current non-operating expenses.

5.5 billion.

After excluding the impact, the company realized net attributable profit in 201827.

21 trillion, with an increase of 10.

03%, corresponding to the full caliber single flat net profit1.

46 yuan, compared with 1 in 2017.

36 yuan improvement.

Net operating cash flow in a single quarter9.

3.3 billion, the operating quality continued to improve.

In the fourth quarter of 2018, the cash received from the company’s sales of goods and other products was basically the same as Q3. Q4 purchased goods and received labor services to reduce cash from Q3, and the company achieved net operating cash flow of 9 in a single quarter.

33 ppm, an increase of 1 from Q3.

5.1 billion.

Net initial operating cash flow 27.

800 million, exceeding attributable net profit and steadily improving the quality of operations.

The company’s advantages continue to accumulate and continue to be optimistic about the logic of long-term pricing power.

We mentioned in the in-depth report “Beijing New Building Materials from a New Perspective-Discussing Technical Barriers and Consumption Attributes of Gypsum Boards” in 南京桑拿网 the last chapter. The company’s low-end products have cost advantages, high-end products have advantages over brands, and there is still room for gradual elimination of the industry.It is optimistic that the company’s market share will further increase and high-end products will increase their share under stable profit replacement.

It is estimated that the company will realize a net profit attributable to 2,800,3,500 million yuan in 2019-2021, corresponding to PE, 12, 11, and 9 times. Maintain BUY rating. Risk Warning: 1.

Substantial shortage of land completion suppresses demand; 2.

The new gypsum board production capacity was launched more than expected.