Hua Yuan Zheng Quan·2024-07-12 03:00Investment Rating - The report maintains an "Outperform" rating for the company, indicating a positive outlook despite industry challenges [2]. Core Insights - The company reported a revenue of approximately 21.328 billion yuan in Q1 2024, a year-on-year decline of 32.08%, and a net profit attributable to the parent company of 1.502 billion yuan, down 41.14% year-on-year [2]. - The decline in revenue and profit is attributed to weak downstream demand in the cement industry, exacerbated by a prolonged downturn in the real estate sector and debt issues in certain regions [6]. - Despite the challenges, the company’s gross margin improved to 17.75%, up 1.25 percentage points year-on-year, primarily due to a decrease in the proportion of low-margin trading business [6]. - The report highlights that the DCF valuation method indicates a significant margin of safety, with an intrinsic value of approximately 158.6 billion yuan, which is notably higher than the current market capitalization [6]. - The company holds a substantial cash reserve of about 66.3 billion yuan as of Q1, which may lead to potential dividend increases in the future [6]. Financial Forecast and Valuation - The profit forecasts for 2024 and 2025 have been revised down to 8.376 billion yuan and 9.292 billion yuan, respectively, from previous estimates of 9.940 billion yuan and 12.009 billion yuan [6]. - The report projects earnings per share of 1.58 yuan for 2024, 1.75 yuan for 2025, and 1.95 yuan for 2026, with corresponding PE ratios of 16X, 14X, and 13X based on the stock price as of July 10 [8][9].