Huaxin Cement (600801): Demand remains warm, Huaxin has high flexibility
Investment Highlights Event: On April 9, 2019, the company announced a performance forecast for the first quarter of 2019.
The company’s first quarter 2019 results are expected to increase from 450 million yuan to 50,000 million yuan, an annual increase of 85% to 94%, and 53,036 in the same period last year.
440,000 yuan, that is, net profit attributable to mothers in the first quarter of 2019 was 98,036.
440,000 yuan -103036.
In Q1 2019, Huaxin Cement’s performance showed high flexibility, which is a long-term performance growth and a good foundation.
The company’s 2019Q1 cement and clinker sales volume increased by about 19% year-on-year.
The high sales growth in the first quarter was mainly due to the strong demand for real estate and infrastructure in the Southwest from January to March and the continuous increase of Huaxin’s regional concentration.
We have been leading the way. The strength of real estate’s high-tech start-up did not drop significantly last year, and the construction interval has also picked up. With the development of regional infrastructure, the overall cement demand advantage this year is extremely strong, and the short-term concentrated start-up of the region has caused demand to exceed expectations.
Chongqing Tower Tower Cement, which was consolidated in April last year, and Tibet Shannan’s third-stage production line, which was ignited at the end of last year, also contributed part of the increase. However, as the overall demand in Tibet was stagnant in the first quarter, we calculated that the effective capacity increase in the consolidated table was not significant.Large, and the endogenous growth of the company’s sales is the main contribution.
From the perspective of unit profit, we estimate that the company’s gross profit per ton in 2019Q1 is about 126 yuan, which increased significantly by about 18 yuan last year.
On the supply side, although the marginal production policy of administrative nature has weakened, the self-discipline of inter-regional enterprises has been further strengthened. At the same time, the centralized release of demand side has driven regional prices to remain stable during the off-season, while peak-season profits have steadily increased.
Aggregate production capacity was gradually put into operation, with sales growth increasing by 46%, and high profitability maintained.
300 ° / year along Shannan in Tibet, 100 ° / year project in Yunnan Honghe, Yunnan. The aggregate output of Huaxin continues to increase, the gross profit per ton and the net profit per ton are basically the same or slightly increased in 2018, and the proportion of aggregate contribution to performance has further increased.
We believe that aggregate is a natural high-margin industry. In the future, the industry concentration will further increase, and it will contribute more profit growth poles for the company.
In 2019, the profit progress of co-processing of cement kilns improved.
In 2019, the company is expected to gradually increase the amount of hazardous waste disposal in the co-processing of cement kilns. It also optimizes the co-processing process through technological advancement, which is expected to significantly improve efficiency and improve profitability.
Investment suggestion: Benefiting from the tightening of the cement supply side and the high concentration of demand, Huaxin Cement achieved extremely high profitability in 2018.
We believe that the high level of supply and demand is expected to gradually promote the company’s profitability to go further. Huaxin Cement, as an industry innovation pioneer, also has similarly feasible development points.
Main business of cement: The expectation of maximizing the contradiction between supply and demand exceeds expectations, extending the cement boom cycle.
From the perspective of the supply side, in the core business area of Huaxin Cement, the peak shift production policy is continuous; the rapid concentration of the Yangtze River cement industry in recent years has led to an increase in the industry’s spontaneous capacity expansion capabilities, although administrative peak shift production has gradually moved from “one size fits all””Steering” to adapt to local conditions “, but the strong supply of the cement industry itself will be committed to achieving high production capacity constraints; on the demand side, Huaxin’s main sales area has substantial potential inventory replacement, and new start-up levels in 2019 can be supported to better inventory de-allocationThe demand for cement with a higher ratio of off-plan sales to actual targets from 2019 to 2020 must be at least reduced; at the same time, the government’s intervention in credit expansion can bring infrastructure recovery and support regional cement demand.
From the perspective of cost, due to the lack of coal in the 杭州夜网论坛 region, the overall cost of coal relying on external transportation in the history of Huaxin is relatively high, and the new core coal transportation channel, the Menghua Railway, is expected to open to traffic in 2019-2020. Crossing Hubei is expected to serve the company.Bring improvements in fuel costs.
Collaborative disposal of cement kilns: In the long term, the government will not change the trend of increasing the weight of environmental protection and sustainable development, the company’s layout is long-term, and the positive externalities of the environment are expected to be gradually reassessed.
At present, Huaxin’s collaborative disposal of domestic waste is at a slight loss. The core reason is that the government subsidy is still at the replacement level. From the perspective of the structure of alternative 杭州桑拿 products disposed by the company, the proportion of hazardous waste will gradually increase in the future.
For the standard waste incineration power generation, the cement kiln co-processing alternative function is more complete, the treatment effect is better, and the conversion is higher. However, the cement enterprises have not been properly supplemented because of this. We believe that the future government will consider environmental protection and sustainable development in its development ideas.The weight of the company continues to increase, and companies that co-process through cement kilns have upward policy budgets and are expected to gradually increase their profits.
Aggregate and brick-making business: The value of raw material resources continues to increase, and the industrial chain is extended to create new profit points.
As the government gradually re-evaluates the value of resources in recent years, the company’s aggregate production capacity continues to expand, and aggregate products with high gross margins will contribute more profits to the company.
The company also explores the use of aggregate sintering to make bricks, turning waste into treasure, forming a good synergy with aggregates, and optimizing resource utilization efficiency.
According to the annual report guidelines, the company plans to sell 7,296 piles of cement and commodity clinker, 368 multi-purpose concrete, 2,662 aggregates in 2019, and the total disposal volume of environmental protection business will reach 304 mm.
The company plans to invest USD 5 billion in 2019, with the main growth points in the cement, aggregate and new materials business.
Among them, the cement business is mainly to further expand overseas projects and replace old capacity, plan to build Nepal and Uzbekistan projects, complete the construction of old capacity replacement projects advised by Huangshi in Hubei and Yunnan Lu; continue to expand aggregate projects, and vigorously develop new materials business.
We estimate that the company’s net profit attributable to its parent from 2019 to 2020 will be 59.
800 million, 60.
30,000 yuan, maintaining the “overweight” level.
Risk Warning: Macroeconomic Risks 2.
Supply-side reforms fall short of expectations