SHANGFENG CEMENT(SZ:000672) HTSC·2025-10-28 03:44Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 13.33 [7]. Core Views - The company has achieved a revenue of RMB 1.33 billion in Q3, a year-over-year decrease of 6.8% but a quarter-over-quarter increase of 0.4%. The net profit attributable to shareholders reached RMB 280 million, reflecting a year-over-year increase of 20.3% and a quarter-over-quarter increase of 68.4% [1][7]. - The company is focusing on cost control and strategic investments in technology, particularly in the semiconductor materials sector, which has contributed significantly to its profitability [4]. - The company has a strong cash position with cash and cash equivalents totaling RMB 14.7 billion and trading financial assets of RMB 16.4 billion as of the end of Q3 [3]. Summary by Sections Revenue and Profitability - In the first three quarters of 2025, the company reported cumulative revenue of RMB 3.6 billion, down 5.7% year-over-year, while the net profit attributable to shareholders was RMB 530 million, up 30.6% year-over-year [1]. - The company sold 14.15 million tons of cement and clinker in the first three quarters, a decrease of 6.2% year-over-year, which is higher than the national decline of 5.2% [2]. Cost Management - The company has successfully reduced operating costs by 9.7% year-over-year, with controllable costs for cement and clinker decreasing by RMB 2.97 and RMB 5.59 per ton, respectively [2]. - The management expense ratio has decreased significantly to 16.2%, down 1.2 percentage points year-over-year, indicating effective cost control measures [3]. Investment Strategy - The company has entered a harvest phase for its equity investments, contributing approximately RMB 1.7 billion to net profit, which accounts for 31% of total net profit [4]. - The company plans to continue focusing on strategic sectors and aims to accumulate over RMB 3 billion in equity assets [4]. Financial Forecast and Valuation - The company is expected to achieve net profits of RMB 740 million, RMB 790 million, and RMB 850 million for the years 2025, 2026, and 2027, respectively [5]. - The target price has been adjusted to RMB 13.33, based on a price-to-book ratio of 1.37x for 2026, reflecting a 15% premium over the average price-to-book ratio since 2016 [5].