TTC(SH:600326) Tianfeng Securities·2024-06-12 12:00Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [3][4][8]. Core Views - The company is positioned as a leading cement producer in Tibet, with expectations for improved profitability driven by rising demand and optimized costs [1][2][3]. - The cement demand in Tibet is anticipated to grow significantly due to infrastructure investments, particularly in transportation and water conservancy projects [2][3][53]. - The supply side is characterized by strict capacity control, which is expected to enhance capacity utilization rates [3][7]. Summary by Sections Company Overview - The company, Tibet Tianlu, is a major player in the cement industry in Tibet, holding a clinker production capacity of 4.34 million tons, accounting for 34% of the region's capacity [1][24]. Demand Growth - Cement production in Tibet saw a year-on-year increase of 51% in 2023, driven by major infrastructure projects [1][2]. - The construction of railways and hydropower stations is expected to significantly boost cement demand, with projections indicating an additional demand of 770,000 tons in 2024 and 1,050,000 tons in 2025 [2][53]. Supply Side Dynamics - The report highlights a high concentration in the supply side, with a CR6 of 100% and a CR2 of 60%, indicating strong pricing power for leading companies [7]. - The company’s cement cost per ton is currently higher than its peers, but there is potential for cost optimization as capacity utilization improves [7][8]. Financial Projections - The company is projected to achieve a net profit of 1.12 billion, 4.38 billion, and 9.25 billion yuan for the years 2024 to 2026, respectively [8]. - The target price for the company's stock is set at 5.28 yuan, based on a valuation method that applies PE multiples to its building materials and construction businesses [8].