Investment Rating - The report maintains a Buy rating for Western Cement (2233 HK) [7] Core Views - Western Cement is a leading private cement enterprise with a strong market position in Shaanxi and expanding presence in Xinjiang and Africa [4] - The company has completed comprehensive layout in production equipment, resource supply, and logistics, entering a period of volume expansion [2] - Africa's cement demand exceeds 200 million tons, with prices ranging from 600-1200 RMB/ton, making it a new target for Chinese cement companies [2] - Western Cement is expected to achieve net profits of 1 37 billion and 1 81 billion in 2024 and 2025, respectively, with P/E ratios of 3 7x and 2 8x [6] Domestic Market: Shaanxi and Xinjiang - In Shaanxi, the company holds a 27% market share in clinker capacity, with a regional CR3 of 69%, ensuring stable market conditions [5] - Shaanxi's cement price is 375 RMB/ton, higher than the Yangtze River Delta, reflecting good market order [5] - In Xinjiang, the company ranks 5th in clinker capacity, with two production lines in Yili and Hotan, contributing to significant profit elasticity [5] - Xinjiang's cement production in 2023 was 48 1 million tons, up 25% YoY, with prices and profitability remaining high [5] Overseas Market: Focus on Africa - Africa's cement demand is driven by population growth and urbanization, with a total demand exceeding 200 million tons [6] - Western Cement has focused on four countries: Congo, Mozambique, Ethiopia, and Uzbekistan, with Congo and Ethiopia showing strong GDP growth [6] - In Congo, the cement price exceeds 1000 RMB/ton, and in Ethiopia, it remains above 800 RMB/ton due to supply shortages [6] - The company's overseas revenue reached 2 77 billion in 2023, accounting for 30 7% of total revenue [12] Competitive Landscape - In Africa, the top 10 companies account for 52% of the market, with Dangote being the leader with a capacity of 48 6 million tons [31] - Western Cement's overseas clinker capacity is expected to reach 853,000 tons by 2024, with a significant focus on Africa [40] Financial Performance and Outlook - The company's revenue in 2023 was 9 024 billion, up 6 3% YoY, while net profit decreased by 65 3% to 421 million due to impairments [12] - Capital expenditures have accelerated, with 1 7 billion, 3 1 billion, 4 2 billion, and 3 7 billion spent from 2019 to 2022, respectively [41] - The company's overseas projects are entering a profit release phase, with cash flow expected to stabilize [41]
出海头兵，硕果正采