2025-10-27 12:06Summary of Huaxin Cement Co. 3Q25 Earnings Call Company Overview - Company: Huaxin Cement Co - Industry: Greater China Cement - Market Cap: US$5,440 million - Ticker: 600801.SS (A-share), 6655.HK (H-share) Key Financial Highlights - 3Q25 Performance: - Net profit reached Rmb900 million, representing a 121% YoY increase and a 3.5% QoQ increase, exceeding market expectations [2][4] - 9M25 Net Profit: Grew 76% YoY to Rmb2 billion [2] - Revenue Growth: Driven by increased overseas cement shipment volumes and improved gross profit per ton [2] - SG&A Expenses: Controlled with a mild increase of Rmb104 million YoY to approximately Rmb1 billion in 3Q25, resulting in an SG&A ratio of 11.3%, up 0.6ppt YoY [3] Strategic Developments - Acquisition of Lafarge Africa: - Huaxin acquired an 83.81% stake in Lafarge Africa for approximately US$774 million on August 29, 2025 [4] - The Nigerian business contributed an estimated Rmb100 million to Huaxin's earnings in 3Q25, with full consolidation expected in 4Q25, likely enhancing earnings further [4] Dividend Announcement - 9M Dividend: First-time announcement of Rmb0.34 per share, implying a 35% payout ratio of 9M25 earnings, compared to Rmb0.46 per share and 40% payout for FY24 [5] - Dividend Yield: Implies a 1.6% yield for A-shares and 2.3% yield for H-shares [5] Analyst Ratings and Price Target - Rating: Overweight (OW) on both A and H shares due to high earnings growth visibility from overseas expansion and attractive valuation [5][7] - Price Target: Rmb22.90, indicating an 11% upside from the closing price of Rmb20.66 on October 24, 2025 [7] Risks and Considerations - Upside Risks: - Better-than-expected demand in Hubei and Yunnan could mitigate supply/demand impacts [10][12] - Stricter production suspension and environmental regulations may enhance pricing power [10][12] - Downside Risks: - Weak fundamentals in Guizhou could negatively affect pricing in southwestern and central China [11][13] - Slower-than-expected growth in overseas markets may hinder overall performance [11][13] Conclusion - Huaxin Cement Co's strong financial performance in 3Q25, driven by overseas expansion and strategic acquisitions, positions the company favorably in the cement industry. The positive market reaction to earnings and the initiation of dividends reflect confidence in future growth prospects. However, potential risks related to market conditions and operational challenges should be monitored closely.