Shangfeng Cement (000672): Performance growth in line with expectations The development of the industrial chain opens up room for growth

Shangfeng Cement (000672): Performance growth in line with expectations The development of the industrial chain opens up room for growth

Event: The company released three quarterly reports and achieved operating income of 45 in the first three quarters of 2019.

80,000 yuan, an increase of 26 in ten years.

3%; net profit attributable to mother to be 15.

40,000 yuan, an increase of 67 in ten years.


Main point of view: Q3 net profit attributable to mothers increased by 45%, and high sales growth is expected to continue the company’s Q3 to achieve revenue of 16.

90,000 yuan, a year-on-year increase of +9.

6%, a growth rate of 37% and 40% over the previous two quarters; net profit attributable to mothers was achieved5.

900 million, a year-on-year increase of +44.

5%, a quarterly growth rate of 116% compared to the previous two quarters, and 72% unchanged, but still maintains rapid growth.

The company sold cement clinker 718 at 19H1, YoY + 16%. It is estimated that the sales volume of Q3 was about 435 tons, continuing the growth trend; the gross profit per ton was about 168 yuan, which was 6 yuan lower in 19H1 but higher than the same period last year.

In the context of increasing economic pressure, regional investment in East China is expected to maintain a certain level of strength, and Q4 cement volume and price are supported.

The high prosperity of the Yangtze River Delta market is sustainable. Due to the acceleration of the infrastructure in the Yangtze River Delta and the actual demand forecast under the trend of population net change, the overall demand for cement will remain stable, and the concentration of the Yangtze River Delta region is high (CR5: 74%).However, due to the environmental protection of the 13th Five-Year Plan, the main production area of Anhui Province is at least a certain distance from the target. It is believed that local environmental protection and 杭州夜网 production restrictions will still be strict, so that the supply side will also remain good, and the industry’s high prosperity will be sustainable.The core of the enterprise benefits.

Deeply plowing East China and expanding the Northwest Stable Performance Company In 2015/2019, the company has successively entered Xinjiang through acquisitions, Ningxia, and Xinjiang ‘s production capacity has turned its losses into surpluses through refined management.New growth points in performance.

The expansion of the industrial chain opens up the growth space and issues a three-year plan to comprehensively develop the industrial chain, which involves the collaborative disposal of aggregates and cement kilns.

At present, the barriers to mining resources are gradually emerging, the gap in hazardous waste disposal is large, and the co-processing of cement kilns has a wide range of applications. We believe that co-processing of aggregates and cement kilns will provide new growth momentum for the company.

Risk reminders: Product prices continue to decrease, and the project’s progress in reaching production is less than the expected profit forecast. We expect the EPS to be 2 from 2019 to 2021.

14 yuan, 2.

52 yuan, 2.

70 yuan, corresponding to the current expected PE is 7X, 6X, 5X, maintaining the “overweight” level.