Tianfeng Securities expects the net profit of Western Cement (02233) to return to mother for 24-26 to be RMB 12.07/19.60/2.795 billion, respectively.
The Zhitong Finance App learned that Tianfeng Securities released a research report stating that it covered Western Cement (02233) for the first time and gave it a “buy” rating. The company's net profit for 24-26 is estimated to be 12.07/19.60/2,795 billion yuan, respectively, +186.6%/+62.4%/+42.6% year-on-year. The estimated 24-26 EPS was 0.22/0.36/0.51, with a target price of HK$1.55.
According to the report, the company's overseas business revenue increased year by year. The company's overseas revenue/profit reached 27.7/1,015 billion yuan respectively in '23, +145%/+197% year-on-year, accounting for 31%/74%, respectively. We are optimistic about the company's future overseas business contribution. The company's first overseas cement project was located in Mozambique. Production capacity has gradually expanded in recent years, reaching 4.8 million tons by the end of 23, and is expected to reach 1,220/ (slightly less) 19.7 million tons in 24/25, respectively.
On the African side, the countries selected by the company in Africa are all within the top 20 most populous countries in the region. Local economic development support is strong, and there is broad space for cement demand. On the supply side, competition in the African cement market is relatively fierce. By the end of 2020, the cement production capacity in Africa was 386.1 million tons/year, and CR10 was 52.4%. The bank expects that in the future, as the company's production capacity is gradually implemented in various parts of Africa, the company is expected to rank in the top 10, and its market share will increase dramatically. In Central Asia, the company chose Uzbekistan. The country's population and GDP have grown steadily in recent years, and cement production reached 14.6 million tons in '22. Currently, the cement market in Ukraine is highly competitive. After the company is put into operation, it will occupy a large market share, and the leading position is expected to stabilize.