Guotou Securities·2025-07-16 00:32Investment Rating - The investment rating for Huaxin Cement is "Buy-A" with a target price of 15.2 CNY, while the current stock price is 13.25 CNY [5]. Core Views - The company is expected to achieve a net profit attributable to shareholders of 1.096 to 1.132 billion CNY in H1 2025, representing a year-on-year increase of 50% to 55% [1]. - The second quarter of 2025 is projected to see a net profit of 862 to 898 million CNY, reflecting a year-on-year increase of 55.84% to 62.44% [1]. - Despite a decline in domestic cement demand, the company is likely to benefit from increased overseas sales and improved profitability due to falling coal prices [2][3]. - The China Cement Association's initiatives to optimize supply-side conditions are expected to support price and profitability recovery in the cement industry [3][9]. Summary by Sections Financial Performance - The company anticipates a significant increase in net profit for H1 2025, with a rise of approximately 365 to 402 million CNY compared to the previous year [1]. - The expected net profit for Q2 2025 is between 862 to 898 million CNY, marking a substantial year-on-year growth [1]. Market Conditions - From January to May 2025, national cement production decreased by 4% year-on-year, with regional variations in production across key areas [2]. - Despite a general decline in domestic demand, cement prices in key sales regions remained high, contributing to improved profitability for the company [2]. Overseas Expansion - The company has made significant strides in international markets, with expected increases in overseas cement sales and profitability due to recent technological upgrades and new production capacities in South Africa, Nigeria, and Brazil [3][9]. - The company is set to benefit from a new cement production line in Mozambique, which will contribute to output in 2025 [3]. Industry Outlook - The cement industry is undergoing supply-side reforms aimed at curbing excessive production and low-price competition, which is expected to gradually improve the supply-demand balance and support price recovery [8][9]. - The company's integrated strategy and high-margin aggregate business are anticipated to enhance overall performance in the coming years [9].