Investment Rating - The report maintains a "Buy" rating for the company with a target price of 1.40 HKD, reflecting a 7x PE for 2024 [4][5]. Core Views - The company experienced a decline in net profit of 27.3% year-on-year, with total revenue of 3.87 billion HKD in the first half of 2024, primarily due to domestic business challenges [1][2]. - Overseas cement sales showed resilience with a 9.4% increase in revenue, driven by favorable market conditions in Africa, while domestic sales faced significant pressure [2][3]. - The company is expected to benefit from the release of new production capacity in the second half of the year, which could enhance profit elasticity [2][4]. Summary by Sections Financial Performance - In the first half of 2024, the company reported a total revenue of 39.01 billion HKD, down 11.3% year-on-year, with net profit at 3.87 billion HKD, down 27.3% [1]. - Domestic revenue fell by 25.4% to 23.80 billion HKD, while overseas revenue increased by 9.4% to 13.22 billion HKD [1][3]. Overseas Operations - The company’s overseas cement sales volume increased by 2.4% to 1.47 million tons, with an average price rise of 6.8% to 897 HKD per ton [2]. - Significant revenue growth was noted in the Congo, with a 495.3% increase, while Ethiopia faced a decline due to production halts [2]. - The overseas profit contribution rose to 90% of total profits, highlighting the growing importance of international operations [2][4]. Domestic Operations - Domestic cement sales volume decreased by 10.7% to 7.09 million tons, with an average price drop of 15.8% to 270 HKD per ton [3]. - The overall gross margin declined to 26.61%, reflecting the pressures in the domestic market [3]. Future Outlook - The company plans to reduce capital expenditure after the completion of two overseas production lines, which is expected to ease debt pressure [3]. - With the anticipated ramp-up of new production capacity, profitability is expected to improve significantly in 2025 and 2026 [2][4].
西部水泥：海外水泥量价齐升，产能释放有望持续带来高业绩弹性