TSC(SZ:000877) Tianfeng Securities·2024-08-27 13:50Investment Rating - The report maintains a "Buy" rating for the company with a target price of 6.40 CNY, reflecting a 0.55 times PB for 2024 [4][6]. Core Insights - The company reported a net profit of -34.14 billion CNY for the first half of 2024, marking a significant decline from profitability in the previous year [1]. - Revenue from cement and clinker fell by 30.98% year-on-year to 252.11 billion CNY, primarily due to insufficient funding in real estate and infrastructure [2]. - The company is expected to benefit from its scale advantages and potential recovery in demand, which could lead to improved profitability [4]. Financial Performance Summary - The company achieved a gross margin of 11.39% in the first half of 2024, down 3.70 percentage points year-on-year, with a net margin of -9.39% [3]. - Operating cash flow decreased by 70.86% year-on-year to 15.24 billion CNY, attributed to reduced cash receipts from sales [3]. - The company’s total liabilities to assets ratio stood at 67.16%, indicating a stable capital structure [3]. Revenue and Profit Forecast - The forecast for the company's net profit is adjusted to 0.5 billion CNY for 2024, with subsequent years projected at 15.7 billion CNY and 24.8 billion CNY for 2025 and 2026 respectively [4]. - Revenue is expected to decline by 19.01% in 2023, followed by a further decrease of 11.76% in 2024, before a slight recovery in subsequent years [5][14]. Market Position and Strategy - The company holds the largest production capacity in the country for clinker, ready-mixed concrete, and aggregates, with ongoing projects expected to enhance profitability in the future [2]. - The company is actively pursuing business integration to improve operational efficiency and leverage internal synergies [2].