Investment Rating - The report assigns a "Buy" rating for the company with a target price of HKD 2.08, based on its valuation and growth potential [4]. Core Views - The company is a leading cement producer in South China, benefiting from both traditional and new building materials, with cement revenue accounting for 60-80% of total income [1][11]. - The company has expanded its aggregate and new material business since 2021, with aggregate revenue contributing HKD 1.62 billion and gross profit of HKD 880 million in 2023, indicating a growing segment [1][3]. - The report highlights the potential for profit recovery in the cement sector due to recent price increases in the Guangdong and Guangxi regions, following a period of declining prices [2][4]. Summary by Sections Company Overview - The company, known as China Resources Cement Holdings, has a total share capital of approximately 6.98 billion shares and a market capitalization of about HKD 10.40 billion [1]. - The company has a debt-to-asset ratio of 36.89% and a net asset value per share of HKD 6.94 [1]. Cement Market Analysis - The demand for cement in Guangdong is expected to grow, supported by infrastructure projects and a rebound in fixed asset investments, with a projected increase in construction activities [2][23]. - The supply side has seen a significant increase in clinker capacity in Guangxi, with a total of 24.64 million tons added from 2020 to 2023, leading to a more concentrated market [2][24]. - The report notes that the price of cement in the region has been recovering since June 2023, indicating a potential for improved profitability [2][4]. Non-Cement Business - The company has made significant investments in aggregate production, with a total capacity of 92.5 million tons and sales of over 45 million tons in 2023, contributing to its revenue growth [3][13]. - The company has diversified its business into new materials, establishing a solid foundation for long-term transformation [3][11]. Financial Projections - Revenue projections for 2024-2026 are estimated at HKD 23.32 billion, HKD 23.69 billion, and HKD 25.04 billion, respectively, with a forecasted net profit of HKD 860 million, HKD 1.23 billion, and HKD 1.52 billion [4][7]. - The company maintains a high dividend payout ratio of 45-50% over the past five years, with a current price-to-book (PB) ratio of 0.26, indicating strong valuation appeal [4][7].
华润建材科技：华南水泥龙头，水泥骨料双轮驱动，高分红低估值显优势