HUAXIN CEMENT(600801) 证券时报网·2024-12-04 01:39Overseas Expansion and Acquisition - Huaxin Cement plans to acquire building materials assets in Nigeria from Holcim Limited for USD 560 million and USD 280 million respectively [1] - After the transaction, Huaxin Cement will indirectly hold 83.81% of the target company and include it in its consolidated financial statements [2] - The target company reported net profits of USD 57 million in 2023 and USD 36 million in the first half of 2024, potentially contributing an incremental profit of CNY 400-500 million to Huaxin Cement [2] - The acquisition requires approval from Huaxin Cement's shareholders' meeting, China's National Development and Reform Commission, Ministry of Commerce, and relevant Nigerian authorities [4] Overseas Market Performance - Huaxin Cement's overseas cement and clinker sales volume increased by 41% YoY in the first nine months of 2024, generating revenue of CNY 5.936 billion and net profit of CNY 847 million [5] - Overseas business accounted for less than 25% of Huaxin Cement's total revenue but contributed approximately half of its net profit in the first three quarters of 2024 [5] - Overseas markets have become a crucial support for stabilizing Huaxin Cement's performance [6] - Huaxin Cement has expanded its overseas presence to 12 countries, including Tajikistan, Cambodia, Nepal, South Africa, and Mozambique [5] Industry Comparison - Huaxin Cement's net profit exceeded CNY 1.1 billion in the first three quarters of 2024, outperforming most peers in the cement industry [5] - The net profit margin of the target company in Nigeria is around 12.5%, slightly lower than Huaxin Cement's existing overseas business net profit margin of 14.3% [9] - Conch Cement's overseas market gross profit margin reached 39.99% in the first half of 2024, significantly higher than its domestic market gross profit margins of 18.79%-23.24% [6] - Tianshan Cement's overseas regional gross profit margin reached 43.93% in the first half of 2024 after integrating China National Building Materials' assets [7] Market Potential in Nigeria - Nigeria is Africa's most populous country and largest economy, with a concentrated cement industry structure and only three major cement manufacturers [8] - The largest cement manufacturer in Nigeria holds over 50% of the market share, and the current per capita cement consumption is only about 140 kg annually, indicating significant growth potential [8] - The target company has four large cement plants in Nigeria's core markets and holds high-quality limestone resources [9] Holcim's Asset Restructuring - Holcim Limited was formed through the merger of Lafarge and Holcim in 2014, with a history dating back to 1833 and 1912 respectively [10][11] - Holcim has been active in the Chinese market since before the merger, with investments in companies like Huaxin Cement and Dujiangyan Lafarge Cement [11][12] - Holcim has been divesting assets globally, including a failed USD 2.15 billion asset sale in the Philippines in 2019 and a USD 1.05 billion sale of its Indian cement business to Adani Group in 2022 [4][15] - The estimated value of the Nigerian target company's 100% equity is between USD 1.1 billion and USD 1.6 billion [17] Transaction Details - Huaxin Cement will need to conduct a mandatory tender offer for the remaining 16.19% public shares of the Nigerian target company after completing the initial acquisition [16] - The transaction is still in its early stages and faces multiple uncertainties, including regulatory approvals from Chinese and Nigerian authorities [17][18]