Conch Cement (600585) Review of 2019 Third Quarterly Report: High Base Number Leads to Performance Growth, Rapid Profit Stability
Matters: The company’s January-September 2019 performance growth increased by 15%, EPS4.
49 yuan From January to September 2019, the company realized operating income of 1107.
60,000 yuan, an increase of 42 in ten years.
4%, net profit attributable to shareholders of listed companies 238.
2 ‰, 15% growth over ten years, EPS4.
In the third quarter alone, the company’s operating income was 391.
100 million US dollars, an annual increase of 22%, net profit attributable to shareholders of listed companies of 85.
600 million, an increase of 10 in ten years.
The company expects a ROE of 19 in the first three quarters.
82%, net cash flow from operating activities amounted to 260.
20,000 yuan, an increase of 26 in ten years.
1%, the asset-liability ratio dropped further 2.
2pct, to 20.
Comment: The self-product sales volume continues to grow and the profitability is stable. The 2019 Interim Report shows that the company’s self-product sales volume1.
4.6 billion tons, a 6% increase. It is estimated that the company’s self-product sales continued to grow in the first three quarters, and it is expected to increase by about 8%.
In the third quarter alone, the company ‘s self-product gross profit was about 140 yuan / ton. At the same time, there was a slight decrease from the previous quarter. Basically, during the off-season in the third quarter, the average price of points in the south-south, southwest, and southeast areas decreased compared with the same period last year.There has been a certain increase in growth rates, raw material costs, and labor costs.
The volume of trade has increased significantly, from more than 2000 in the same period in 2018 to more than 8,000 in the first three quarters of 2019, so that the company’s revenue and operating costs can be expanded.
In terms of volume and price, core regions performed better overall. In terms of subregions where high bases eventually led to a narrowing of the rise in the same period in 2018, the performance of core regions in Conch Cement has improved: from January to September, grain output in East China increased.
9%, Central South, Southeast increased by 3.
7% and 2.
2%, an increase of 3 in the Southwest Decade.
In terms of prices, the national average price of cement has increased by 2 this year.
2%, of which, the cumulative average price of East China and Central and South China increased by 5 respectively.
The peak season of the fourth quarter has arrived, and the price of cement in the southern region has increased. However, due to the large price base in the same period of 2018, the current price of cement has narrowed.
Earnings forecast and investment rating Since this year, cement demand is better than expected. From January to September 2019, the national cement output reached 16.
9重庆耍耍网 billion tons, an increase of 6 in ten years.
The high base in the same period of 2018 led to the initial growth of Conch’s cement performance. However, the company’s profitability is strong and the company has maintained positive growth in the third quarter alone.
Looking forward to the fourth quarter and 2020, measures such as environmental protection, self-regulation and production restriction will continue. The supply side is generally orderly, and the demand side will remain stable under the combined effects of real estate investment and infrastructure investment. It is expected that the apparent amount of cement and the price will also show a platform stage.Characteristics, the profit stability of cement companies, especially leading companies, is expected to continue to exceed expectations.
We maintain the company’s EPS for 2019-21 is 6, respectively.
The profit forecast of 60 yuan, the industry average and the company’s historical forecast level, give the company a target price of 49.
2 yuan, corresponding to the PE of 2019 is estimated to be 8 times, maintaining the “recommended” level.
Risk reminder: Real estate and infrastructure investment growth will decrease, which will lead to a decline in demand; the industry’s profitability is better, and the progress of de-capacity leads to the worry of excess capacity in the medium and long term.