HTSC·2025-07-21 12:05Investment Rating - The investment rating for the company is "Buy" for both A-shares and H-shares, with target prices set at RMB 17.71 and HKD 13.25 respectively [8][9]. Core Views - The company is recognized as a pioneer in the domestic cement industry with a strong global expansion strategy, particularly through acquisitions in Brazil, which enhances its integrated strategy and is expected to drive growth in scale and profitability [19][20]. - The domestic cement industry is currently experiencing a phase of demand decline while capacity clearance is still needed. However, the company has three core advantages: deep engagement in key regions, high self-supply ratio of raw materials, and leading energy efficiency and environmental processes [2][20]. - The overseas cement business is accelerating, with production capacity growing significantly from 3.9 million tons in 2018 to 23.7 million tons in 2024, reflecting a CAGR of 35.1%. The EBITDA from overseas operations has also increased substantially during this period [3][21]. Summary by Sections Domestic Cement Business - The company focuses on the Yangtze River Economic Belt and key areas in the western development, with major projects expected to support regional demand. The average price of cement in these regions has shown significant year-on-year increases [2][20]. - The self-supply ratio of raw materials is high, with a notable decrease in coal prices since 2025, leading to improved cost trends. The comprehensive energy consumption and greenhouse gas emissions per ton of clinker are industry-leading [2][20]. Overseas Cement Business - The company has rapidly expanded its overseas cement capacity, with a significant increase in sales and profitability from African markets, where the cement prices are notably higher than in Central Asia [3][21]. - The EBITDA from overseas operations has grown from RMB 580 million to RMB 2.37 billion from 2018 to 2024, with the overseas EBITDA ratio increasing from 6.3% to 27.2% [3][21]. Non-Cement Business - The revenue from non-cement clinker business has grown from RMB 1.61 billion to RMB 15.43 billion from 2016 to 2024, with a significant increase in both revenue and gross profit margins [4][22]. - The aggregate business has become a key driver of profitability, with a gross margin that remains significantly higher than other business segments [4][22]. Market Perspective - The report highlights a divergence from market views, emphasizing the importance of strategic planning and operational advantages in overseas markets, particularly through partnerships and acquisitions that enhance market entry and operational efficiency [5][23]. Profit Forecast and Valuation - The profit forecasts for the company have been adjusted upwards, with EPS estimates for 2025-2027 revised to RMB 1.23, 1.50, and 1.64 respectively, reflecting a positive outlook on overseas and non-cement business expansions [6][24].