TSC(SZ:000877)2025-09-26 02:28Summary of Tianshan Cement Conference Call Company Overview - Tianshan Cement is a leading national cement company in China, benefiting from the industry's anti-competition trend and supply-side reform policies, particularly the requirement to address overproduction by the end of 2025 [2][3][12]. Key Points and Arguments Industry Dynamics - The cement industry has entered a downward phase since the peak in 2020-2021, with cumulative demand expected to decline by 23% by the end of 2024 [9]. - The demand structure is shifting, with infrastructure becoming the main driver of cement demand, replacing real estate [10][11]. - The industry faces challenges such as internal competition and the need for capacity reduction, with policies in place to enforce production limits [13][14][15]. Company Performance - Tianshan Cement's clinker sales have declined in line with the industry, with a compound annual growth rate of -10.8% from 2021 to 2024 [18]. - Despite a drop in sales price from 360 RMB to approximately 250 RMB, the company maintained a competitive average price of 247 RMB per ton, second only to Huaxin Cement [18]. - In 2025, the company achieved a significant turnaround in Q2, reporting a profit of 572 million RMB, a year-on-year increase of nearly 140% [19]. Financial Health - The company has a stable financial position, with a decreasing debt-to-asset ratio and low financing costs, averaging 2.61% in 2024 [22]. - Tianshan Cement has committed to a dividend payout ratio of no less than 50% from 2025 to 2027, ensuring shareholder returns [23]. Cost Management and Efficiency - The company is implementing cost reduction measures, including increasing self-sufficiency in limestone and optimizing management, resulting in a decrease in unit costs [21]. - The average unit cost decreased by 23 RMB in 2024, while the average price per ton increased by 13 RMB in the first half of 2025 [20]. Growth Strategies - Tianshan Cement is expanding its non-clinker business, which has increased from 12% in 2020 to 37% in the first half of 2025, enhancing the overall stability of its operations [8]. - The company is also developing its overseas business, with a compound annual growth rate of nearly 21% from 2021 to 2024, and a significant increase in revenue in 2025 due to new projects [27]. Additional Important Insights - The company’s valuation is currently at a historical low, with a price-to-book (PB) ratio of 0.5, compared to the industry average of 0.74 [3][28]. - The market perception is cautious, with concerns about continued demand decline and high costs, but the company’s management believes in the potential for recovery through cost control and policy execution [29][30]. - The company’s strong shareholder structure, with nearly 90% held by the top ten shareholders, provides it with valuation flexibility [6]. Conclusion - Tianshan Cement is positioned to benefit from industry reforms and has demonstrated resilience through effective cost management and strategic expansion. The company’s financial health and commitment to shareholder returns further enhance its attractiveness as an investment opportunity.