Huaxin Cement (600801): Regional prosperity continues to show good value
Event: On 夜来香体验网 August 24, 2019, Huaxin Cement released the 2019 semi-annual report. The report gradually progressed, and the company realized operating income of 143.
870,000 yuan, an increase of 21 every year.
07%; net profit attributable to mother 31.
63 ppm, an increase of 52 in ten years.
93%; Realize basic profit income1.
Opinion: The average sales volume of some of the company’s products has increased, and production capacity is still in an expansion period.
In total, the company sold 3559 cement and clinker.
74 Initially, ten years increased by 10.
69%; aggregate 779 sold.
41 for the first time, growing 27 each year.
74%; sales of concrete 176.
77 for the first time, growing by 18 per year.
72%; the amount of treatment for various types of hypertension into the kiln reached 99.
In September, the whole year increased by 46%.
At present, the company ‘s Yunnan Jianchuan, Jinghong, Kaiyuan and Lincang aggregate projects are completed and put into operation, adding 450 tons / year of aggregate production capacity; Zhaotong, Yunnan; Shiyan, Hubei; Wuhan Changshankou;Hubei Yichang sludge disposal project was put into operation and the environmental protection business disposal capacity was improved in the 134s / year.
In addition, the company’s Yunnan Luquan, Hubei Yellowstone, Uzbekistan and Nepal integrated clinker production line is under construction, and the future increase in production capacity is about 700.
The high prosperity of the core market helped boost the company’s performance.
In the first half of 2019, the company’s major markets were generally positive, especially in Yunnan, Sichuan and Chongqing, which were driven by regional infrastructure, showing a situation of rising volume and price.
However, due to the reduction in the construction of key projects in Guizhou, demand has improved; the impact of rain in the first half of Hunan area also suppressed some of the demand.
In our opinion, taking the measures to limit parking in Guizhou, the supply side began to exert forces and prices rose. The weather in Hunan has improved and downstream demand will gradually be released. In the second half of the year, the market contribution of the two provinces will increase.
Continue to be optimistic about cement market repair.
Since 2019, as some regions continue to increase production capacity through reductions, and at the same time overlap the expected downward impact of the real estate market, the market has seen a double change in increasing supply and decreasing demand in the industry.
However, we believe that supply is the key factor that determines the industry’s prosperity at this stage, and demand is not inevitable.
The “National Building Materials Industry Coordination and Self-discipline to Promote Steady Growth of Economic Benefits” conference held in August 2019 once again demonstrated that supply-side control is the basis for the future development of the industry.
In our opinion, gradually the follow-up market gradually eliminates the expected difference in cement prices, and the cement sector has ushered in the repair of the market in the fourth quarter.
Earnings forecast and rating: Based on the company’s existing share capital, we expect the company’s diluted earnings for 2019-2021 to be different.
14 yuan, 3.
41 yuan, 3.
51 yuan, based on the closing price of 2019-08-27, the corresponding PE is 6 times, 6 times, and 5 times respectively, maintaining the “overweight” level.
Risk factors: macroeconomic downside risks; supply-side contraction is not up to expected risk; the risk of rising raw material costs; new business development is less than expected risk.