HUAXIN BUILDING MATERIALS GROUP(SH:600801) Guotou Securities·2024-08-20 05:08Investment Rating - The investment rating for the company is "Buy-A" with a target price of 16.08 CNY [4]. Core Views - The company, a long-established cement leader, demonstrates strong resilience and growth during industry downturns, supported by its integrated layout and overseas development strategy [2]. - The company has diversified its operations, achieving significant revenue growth in aggregate and concrete businesses, with overseas revenue also showing strong growth [2][3]. - The domestic cement market is currently under pressure, but supply-side adjustments and price recovery expectations are anticipated to improve profitability [3]. Summary by Sections Company Overview - The company has a history of over 100 years and ranks fourth in China with a total clinker capacity of 76.576 million tons as of 2023 [2][15]. - It operates in nine provinces in China and has expanded its business to 16 countries, becoming a leader in the Central Asian cement market [12][15]. - The company has implemented an integrated development strategy over the past two decades, enhancing its production and sales of concrete, aggregates, and high-tech building materials [12]. Operational Performance - The company achieved a revenue CAGR of 8.65% and a net profit CAGR of 9.48% from 2012 to 2023, with a year-on-year revenue growth of 10.79% in 2023 despite industry challenges [2][19]. - The aggregate business accounted for 15.89% of total revenue in 2023, with a gross margin of 45.88%, significantly higher than the overall gross margin of 26.71% [2][16]. - The overseas business has also seen a revenue increase of 29.99% year-on-year, contributing to overall profitability [2]. Market Dynamics - The domestic cement demand is currently in a downturn, but infrastructure projects are expected to support regional demand growth [3]. - The supply-side adjustments since 2022 have led to a shift in the industry's pricing strategy, with companies focusing on profitability rather than market share [3]. - The global cement demand is expected to remain stable, with regions like the Middle East, India, and Africa benefiting from local economic and infrastructure development [6]. Financial Forecasts - The company is projected to achieve revenues of 35.033 billion CNY, 36.177 billion CNY, and 37.590 billion CNY for 2024, 2025, and 2026, respectively, with corresponding net profits of 2.794 billion CNY, 3.116 billion CNY, and 3.467 billion CNY [6][7]. - The company’s PE ratios for 2024, 2025, and 2026 are expected to be 9.8, 8.8, and 7.9, respectively, indicating a favorable valuation [6].