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Conch Cement: The performance pre-increased announcement is in line with expectations, and the good momentum of cement in the fourth quarter continues

Westdollar.com January 11, 2019 00:00 The Pacific Ocean Yan Guang View original PDF

Conch Cement (600585)

Event: Conch Cement released a pre-announcement announcement on January 10. In 2018, the company expects net profit to increase by 80%-100% (corresponding to RMB 285.4-31.71 billion), and net profit from non-returning mothers will increase by 100%-120% (corresponding to RMB 281.6-30.97 billion).

The performance was in line with expectations, and the cement season in the fourth quarter was high. According to the median of the guidelines, the company achieved a net profit of 9.41 billion yuan in the fourth quarter, an increase of 55.6% year-on-year, which basically met our expectations. According to our calculations, the company's self-produced and self-selling cement clinker increased by about 3% year-on-year. In the fourth quarter of 2018, the company produced and sold 84.8 million tons of cement clinker, an increase of 2.7% year-on-year, with an average price of 355.5 yuan. / ton, an increase of 72 yuan / ton, an increase of 36 yuan / ton in the third quarter, the fourth quarter cement clinker gross profit of 176 yuan / ton, an increase of 59 yuan / ton, an increase of 33 yuan / ton in the third quarter, and 10 The monthly gross profit of November and November was increased by RMB 12/ton and RMB 25/ton respectively compared with the previous month, while the gross profit of December was basically the same as that of November. In the fourth quarter, the overall cement industry in the country continued its good momentum. Solid cement demand and orderly peak production were the main reasons for the company's profit to reach a new high.

The East China South China cement market is expected to remain relatively stable. Although cement demand is under pressure from the downturn in real estate in 2019, considering the recovery of the infrastructure industry and the capacity of capacity replacement will not be released from the end of 2019, we expect the overall decline in cement demand in 2019 will be limited and controllable. At the same time, more than 50% of the company's production capacity is located in our relatively promising Yangtze River Delta and South China markets. Therefore, we believe that as a leading company in the cement industry, the profit level will remain relatively stable in 2019; trading companies will bring sales increments. And further reduce the cyclical fluctuations. According to our calculations, the company's Q4 sales volume is about 47 million tons through the Haizhong trading platform, and the annual sales volume is about 70 million tons. The trade volume has increased significantly (about 5 million tons in 17 years). We believe that the expansion of the trading company's trade scale will not only bring about an increase in the company's performance, but also further reduce the export of clinker in East China, thus further strengthening the regional control of leading enterprises, thereby reducing the cyclical fluctuations of the local cement industry;

The aggregate business has developed rapidly and resource barriers have emerged. Affected by the strictening of environmental protection, illegal mining is strictly restricted, and a large number of high-quality mines owned by the company gradually reflect resource barriers. We estimate that the company's 18-year aggregate sales volume will be about 20 million tons, and the gross profit margin will exceed 70%. A new performance growth point is expected; the company's aggregate production capacity is expected to reach 40-50 million tons by the end of 18, and steadily move toward the goal of reaching 100 million tons of capacity by the end of 2020.

Investment suggestion: We maintain our current profit forecast for the time being. We expect net profit of 296, 300, and 31 billion yuan from 2018 to 2020, corresponding to EPS5.59, 5.66, and 585 million yuan, up 86.86%, 1.33%, and 3.28% year-on-year. And temporarily maintain a "buy" rating. After the company discloses more operational and financial data, we will update it further.

Risk Warning: Demand is lower than expected, peak production is less than expected, and raw fuel prices have risen sharply

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Conch cement fundamental data
  • Total share capital 5.299 billion shares
  • Circulating shares 4 billion shares
  • Earnings per share 3.91 yuan
  • Undistributed profit per share 16.03 yuan
  • Net assets per share of 19.56 yuan
  • Return on equity 21.46%
  • Net profit of 20,716,215,500
  • Net profit growth rate 111.20%
Conch Cement Investment Rating
Overall rating within one month
Overall rating in March
Statistical period Buy Overweight neutral Reduction Sell total
Within one month000000
Within three months600006
Within six months16300019
Within a year28500033
Conch Cement Profit Forecast
                                index 2017A 2018E 2019E 2020E
Earnings per share (yuan) 2.99 5.59 5.81 6.04
Net profit (100 million yuan) 158.56 296.34 307.68 320.13
name Quote change Number of research reports Institutional investment rating (nearly six months)
Buy Overweight neutral Reduction Sell
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Weixing New Material 2.85% 18 10 7 1 0 0
Deep world A 2.68% 0 0 0 0 0 0
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