Investment Rating - Industry Rating: Outperform the market (maintained rating) [3] Core Views - Since October, domestic demand for building materials has shown weakness, with cement affected by cooling, rainfall, and funding issues, resulting in a year-on-year shipment rate still 10 percentage points lower as of last Friday. Glass prices are hindered by insufficient replenishment sentiment post-holiday, leading to increased producer inventory and price stagnation. Currently, the profitability of major building materials like cement and glass remains at relatively low levels. A previously released plan for stable growth in the building materials industry suggests potential continued policy support for supply-side optimization in the fourth quarter. As the year-end performance sprint approaches, companies may increasingly seek to optimize supply and raise prices through market mechanisms. Recent market performance indicates a relative advantage for cyclical stocks, suggesting a possible style shift in the fourth quarter. The building materials sector currently possesses both low valuation defensive attributes and valuation recovery momentum under anti-involution catalysts, continuing to recommend high-demand African cement and glass fiber with price increase expectations [2][17]. Summary by Sections Market Review - Last week (October 13-17, 2025), the CSI 300 index fell by 2.22%, while the building materials sector (CITIC) dropped by 3.48%. Among sub-sectors, ceramics and glass performed relatively well, while fiberglass saw a significant decline. Notable individual stock performances included Fashilong (up 18.1%), Huali Shares (up 14.5%), Hainan Development (up 10.9%), Saitex New Materials (up 7.7%), and Tubao (up 6.9%) [1][9]. Recommended Stocks - The report recommends the following stocks: Western Cement, Huaxin Cement, Qingsong Construction, China National Materials, Honghe Technology, China Jushi, Sankeshu, and Dongpeng Holdings. The current building materials industry is nearing a cyclical bottom, with high-demand new materials expected to continue demonstrating growth potential. Cement is anticipated to benefit from improving infrastructure and real estate demand, with long-term supply dynamics expected to optimize. Recommended stocks include Huaxin Cement, Western Cement, and Qingsong Construction, with a focus on companies like Sankeshu and Dongpeng Holdings that are likely to improve their balance sheets as real estate policies become more favorable [3][17].

Core Viewpoint - Western Cement (02233) has seen its stock price rise over 5%, reaching a historical high of 3.68 HKD, driven by its strategic overseas expansion amid declining domestic demand [1] Group 1: Company Strategy - The company initiated its overseas expansion strategy in 2020, starting with its first production line in Mozambique and expanding to one new country each year [1] - By the end of 2024, the company will have established a presence in Mozambique, the Democratic Republic of the Congo, Ethiopia, and Uzbekistan [1] Group 2: Financial Performance - The overseas gross profit per ton for the company is projected to reach 288 CNY/ton in 2024, significantly higher than the domestic gross profit of 42 CNY/ton [1] - The company plans to sell its Xinjiang cement assets for 1.65 billion CNY in 2025, which will help alleviate debt pressure and support ongoing overseas expansion projects [1]

Core Viewpoint - Western Cement (02233) has seen its stock price rise over 5%, reaching a historical high of 3.68 HKD, driven by its strategic overseas expansion amid declining domestic demand [1] Group 1: Company Strategy - The company initiated its overseas expansion strategy in 2020, starting with its first production line in Mozambique and expanding to one new country each year [1] - By the end of 2024, Western Cement will have established operations in Mozambique, the Democratic Republic of the Congo, Ethiopia, and Uzbekistan, demonstrating a strong commitment to international growth [1] Group 2: Financial Performance - The projected gross profit per ton for overseas operations in 2024 is 288 RMB/ton, significantly higher than the domestic gross profit of 42 RMB/ton, indicating a robust overseas profit margin strategy [1] - In June 2025, the company plans to sell its Xinjiang cement assets for 1.65 billion RMB, which will help alleviate debt pressure and support ongoing overseas expansion projects [1]

Core Viewpoint - Cathay Pacific Haitong has initiated coverage on Western Cement with a "Buy" rating and a target price of HKD 3.73, projecting net profits for 2025 to 2027 at HKD 1.143 billion, HKD 1.422 billion, and HKD 2.015 billion respectively, with earnings per share of HKD 0.21, HKD 0.26, and HKD 0.37 [1] Industry Summary - China's cement production has been declining annually since 2022, with a rapid decrease in output, leading to weak demand that hampers supply-side price stabilization efforts [1] - Domestic cement prices have fallen to their lowest levels due to this decline in production [1] Company Strategy - The company began its overseas expansion strategy in 2020, with its first production line established in Mozambique [1] - The company has been expanding at a rate of entering one new country each year, and by the end of 2024, it will have operations in Mozambique, the Democratic Republic of the Congo, Ethiopia, and Uzbekistan [1] - The company is noted for its strong commitment to international expansion, timely execution, and rapid progress in its overseas ventures [1]

Group 1 - The core viewpoint is that the cement industry is facing significant operational pressure due to low prices, despite a mild recovery in market demand and ongoing production adjustments by companies [1][2] - To improve profitability, cement companies are actively raising prices, with some leading firms in Zhejiang planning to increase prices by 30 yuan/ton starting October 15 [2] - The national average cement price in September was 338 yuan/ton, showing a slight month-on-month increase, while the gross profit per ton for cement companies was 58 yuan, indicating a positive trend in the industry [2][3] Group 2 - In the first half of 2025, the cement sector achieved revenues of 118.1 billion yuan, a year-on-year decrease of 7.7%, but net profit increased significantly by 1487% to 5.2 billion yuan [3] - The cement industry's fundamentals may have reached a turning point, with supply-side production restrictions and demand-side infrastructure support expected to lead to gradual improvements in the second half of the year [3] - Related Hong Kong-listed companies in the cement and building materials sector include China National Building Material, Conch Cement, Huaxin Cement, China Resources Cement Technology, and Western Cement [4]

Group 1 - The core viewpoint is that the cement industry is facing significant operational pressure due to low prices and fluctuating demand, prompting companies to raise prices to improve profitability [1][2]. - The Ministry of Industry and Information Technology, along with other departments, has issued a plan to stabilize growth in the building materials industry, which includes strict control over cement and glass production capacity [1]. - In Zhejiang, there has been a slight recovery in market demand, but prices remain low, leading to increased operational pressure for companies [1]. Group 2 - In September, the national average cement price was 338 yuan/ton, with a month-on-month increase of 2 yuan/ton, and the gross profit per ton for cement companies was 58 yuan, up by 3 yuan [2]. - The cement sector reported revenues of 118.1 billion yuan in the first half of 2025, a year-on-year decrease of 7.7%, but net profit increased significantly by 1487% to 5.2 billion yuan [2]. - Analysts believe that the cement industry's fundamentals may have reached a turning point, with expectations of gradual improvement in the second half of the year due to supply-side restrictions and demand support from infrastructure projects [2]. Group 3 - Related Hong Kong-listed companies in the cement and building materials sector include China National Building Material, Conch Cement, Huaxin Cement, China Resources Cement Technology, and Western Cement [3].

机构：国泰海通证券 研究员：鲍雁辛/申浩/花健祎/冯晨阳 本报告导读： 国内需求下滑之下出海已成必选题。中国水泥产量自2022 年开始逐年下滑，且下滑速度较快，疲软的 需求使得供给侧错峰保价难以维持，国内水泥价格随之跌入谷底，出海已成必选题。公司未雨绸缪，在 2020 年就开启了出海战略，首条产线落地莫桑比克，后以每年新进一国的速度扩张，2024 年底公司已 布局莫桑比克、刚果金、埃塞俄比亚、乌兹别克斯坦四个国家，我们认为公司出海的决心坚定、时机及 时、进展迅速。 出售新疆资产，坚定不移推进海外战略。2024 年公司海外单吨毛利高达288 元/吨、远高于国内的42 元/ 吨，公司推进高毛利的海外布局战略坚定不移。2025 年6 月公司公告拟以16.5 亿元出售新疆水泥资产， 我们认为此举有助于缓解债务压力，保障海外扩张进展（乌干达新建、刚果金收购、津巴布韦产线、莫 桑比克北部产线、远期安哥拉等项目）。 风险提示。汇率风险，外汇管制风险，成本抬升风险。 公司水泥海外产能除了乌兹别克斯坦外，均布局在撒哈拉以南非洲地区，是中国水泥企业出海的翘楚。 投资要点： 首次覆盖，"增持"评级：我们预计公司2025-2027年 ...

Summary of the African Cement Industry Conference Call Industry Overview - The African cement market is highly competitive, featuring local large private enterprises, restructured state-owned enterprises, established multinational companies, and emerging investors, with overall profitability greater than in domestic markets [1][3] - Chinese companies are actively entering the African cement market, with Huaxin Cement and Western Cement making swift decisions and gaining advantages, while Conch Group and China National Building Material are slower in their investment progress [1][4] Key Insights and Arguments - Over the next 5-10 years, African cement prices and profitability are expected to compress due to the weakening trade price advantage of local companies, declining raw material and logistics costs, and lower amortization costs for large production lines from Chinese enterprises [1][5] - Dangote Cement, as a leading local private enterprise, demonstrates superior management and profitability compared to Chinese companies and established multinationals, with its pricing system and customer resource management being key advantages [1][5] - The Nigerian cement market is dominated by Dangote, with a competitive landscape and slightly declining prices; Ethiopia shows strong demand but faces overcapacity risks; Tanzania serves as an important export base in East Africa with stable prices; Mozambique benefits from mineral resources and is experiencing rapid growth [1][6] Market Dynamics - The overall supply-demand situation in the African cement market has seen rapid growth in capacity, output, and demand over the past decade, with significant regional differences in development levels [3] - Local companies maintain high prices through trade margins and government regulations, but these prices are expected to decline as capacity increases [5] - The actual capacity utilization rate in Africa is approximately 50%, attributed to insufficient power supply, raw material mismatches, logistics issues, and lower management levels [1][26] Competitive Landscape - In Nigeria, the cement market is led by five major companies, including Dangote, Huaxin, BOA, IBEITO, and Nigeria United Company, with an expected production capacity of 56.5 million tons in 2024 [7] - The average ex-factory price of cement in Nigeria is projected to be around $50 in the first half of 2025, with Dangote's prices for 50 kg bags at approximately 10,000 Naira ($6.06) [7][8] - Ethiopia's largest cement producer, Sinoma, has a total capacity of 6.3 million tons, but actual sales are only between 8-8.5 million tons, indicating underutilization [9] Future Outlook - The future price trends in the African cement market are expected to stabilize or even rise as production and sales balance improves, despite current low prices [22] - Long-term demand growth is anticipated in East, West, and Central Africa due to large population bases and government-led economic development [23][24] - Chinese enterprises face challenges in North Africa due to higher management and customization service requirements, which are not their strengths [25] Additional Insights - The investment costs for cement plants in Africa are significantly higher than in domestic markets, often ranging from 100% to 200% more, primarily due to high land and construction costs [34] - Dangote's operational efficiency and cost control are exemplary, making it a benchmark for other companies in the region [32] - The uneven distribution of limestone and coal resources across Africa impacts cost structures and investment decisions [29][30]

中国水泥产量自2022年开始逐年下滑，且下滑速度较快，疲软的需求使得供给侧错峰保价难以维持，国 内水泥价格随之跌入谷底，出海已成必选题。公司未雨绸缪，在2020年就开启了出海战略，首条产线落 地莫桑比克，后以每年新进一国的速度扩张，2024年底公司已布局莫桑比克、刚果金、埃塞俄比亚、乌 兹别克斯坦四个国家，该行认为公司出海的决心坚定、时机及时、进展迅速。 出售新疆资产，坚定不移推进海外战略 国泰海通发布研报称，首次覆盖西部水泥(02233)，予"增持"评级，预计公司2025-2027年归母净利润分 别为11.43/14.22/20.15亿元，EPS分别为0.21/0.26/0.37元，鉴于公司是出海翘楚、成长性强，参考可比公 司，该行认可给予公司2026年13倍PE、合理价格3.72港元(人民币兑港元=0.91：1)，给予公司2026年1.3 倍PB估值、合理价格3.74港元，审慎起见选取目标价3.73港元。 国泰海通主要观点如下： 积极出海的陕西水泥龙头 截至2024年底，第一大股东张先生直接、间接合计持股约32.3%，海螺持股29.0%。2024年公司国内销 售水泥1574万吨(其中陕西1320万吨)、实 ...

Core Viewpoint - The report from Guotai Junan initiates coverage on Western Cement (02233) with a "Buy" rating, projecting net profits for 2025-2027 to be 1.143 billion, 1.422 billion, and 2.015 billion yuan respectively, with EPS of 0.21, 0.26, and 0.37 yuan [1] Group 1: Company Overview - Western Cement is recognized as a leader in the cement industry in Shaanxi, actively expanding overseas [2] - The largest shareholder, Mr. Zhang, holds approximately 32.3% of shares, while Conch Cement holds 29.0% [1] - By the end of 2024, the company is expected to sell 15.74 million tons of cement domestically, generating approximately 5.2 billion yuan in revenue, and 4.03 million tons overseas, generating about 3.2 billion yuan in revenue [1] Group 2: Market Conditions - Domestic cement production in China has been declining since 2022, with a rapid decrease in demand leading to falling prices [2] - The company began its overseas expansion strategy in 2020, establishing its first production line in Mozambique and expanding to four countries by the end of 2024 [2] Group 3: Strategic Moves - The company reported a high gross profit of 288 yuan per ton overseas, significantly higher than the domestic gross profit of 42 yuan per ton [3] - In June 2025, the company plans to sell its Xinjiang cement assets for 1.65 billion yuan, which is expected to alleviate debt pressure and support overseas expansion projects [3]