Investment Rating - The report gives a "Buy" rating for the company with a target price of HKD 1.55, based on a 7x PE for 2024 [4][2]. Core Insights - The company is a leading cement enterprise in Shaanxi, China, with a dual market presence in both domestic and international sectors. It has 16 cement clinker production lines in China, with a total domestic capacity of 27 million tons per year by the end of 2023. The overseas capacity, primarily in Africa and Central Asia, is expected to reach 4.8 million tons by the end of 2023 [1][10]. - The company's overseas revenue and profit have shown significant growth, with overseas revenue reaching HKD 2.77 billion and profit HKD 1.015 billion in 2023, representing year-on-year increases of 145% and 197%, respectively [1][2]. - The company is well-positioned to benefit from the growing cement demand in Africa, particularly in populous countries with strong economic growth, and aims to increase its market share significantly in the region [1][3]. Domestic Business Summary - Domestic revenue has been declining, with revenues from Shaanxi, Xinjiang, and Guizhou in 2023 being HKD 3.79 billion, HKD 0.81 billion, and HKD 0.39 billion, respectively. Shaanxi accounts for the largest share at 76% [3][20]. - The demand in Shaanxi is under pressure due to a decline in real estate, while Xinjiang shows resilience with a 24% increase in cement production in 2023 [21][20]. - The supply side indicates a high concentration in the Shaanxi market, with the top three companies holding a 68% market share, which may provide the company with significant pricing power [27][20]. Overseas Business Summary - The overseas business is experiencing high growth, with a focus on Africa and Central Asia. The company has established a strong presence in countries like Ethiopia and Mozambique, where the economic conditions support robust cement demand [1][3]. - The company’s first overseas project in Mozambique has expanded its capacity significantly, and future capacity is projected to reach 12.2 million tons in 2024 and approximately 19.7 million tons in 2025 [1][3]. - The competitive landscape in Africa is intense, but the company is expected to rank among the top 10 cement producers as it increases its capacity in the region [1][3].
西部水泥：陕西优质水泥民企，非洲出海正当时