Conch Cement (600585): Demand recovery confirms cost advantage
Investment points The cement industry is expected to usher in demand for 19 years. Under our neutral expectations, the growth rate of traditional caliber infrastructure investment in 2019 will be about 7.
About 8%, the new caliber fell to 10.
The growth rate is about 5%, which is significantly higher than in 2018; the actual real estate construction and construction project investment growth rate may be more than 5% (negative growth in 18 years), which means that the real demand from real estate will continue to rebound this year.
Under the judgment that the average price of real estate construction investment and infrastructure investment is upward, we judge that the growth rate of FAI’s construction investment in China this year will be in March 2018.
There is a clear rebound based on the 6% growth rate. We judge that the short-term growth rate may increase to double digits. The demand for cement output is expected to resume positive growth, while the growth rate of the same caliber data may increase to 8%., Which means that the sales growth rate of leading companies is expected to increase from about 2% in 18 years to about 8%.
Cost advantage of multi-faceted construction of the company’s cement business. The cost advantage of Conch Cement is mainly reflected in fuel and power. Its fuel and power cost per ton of clinker is only 99 yuan. We judge that the scale advantage and environmental protection and energy saving measures are the advantages of conch fuel costs.The advantage of scale is reflected in two aspects. One is the stronger voice in procurement. The company can reduce the price fluctuation by merging the long-term price with the large coal enterprises. The second is the cost reduction caused by the large-scale production line.Fuel and power costs are big, generally accounting for about 60% of the cost, and according to the research results, the energy saving effect of a single cement production line is more obvious. Generally speaking, every 1000T / d increase in production line capacity, the level can be reduced by 3%.
The concept of recycling development has also benefited the company greatly. All production lines of the company are equipped with a preheating power generation system, and the cumulative annual power generation is up to 8 billion kWh, which provides a huge help for the company to reduce costs.
Aggregate business is ushered in the development period. Sandstone aggregate is currently the largest mining resource. The global amount of sandstone aggregate is about 40 billion tons per year. It is currently the world’s largest producer and consumer.The consumption is about 20 billion tons. According to the price budget of 55-60 yuan per ton, the current output value has exceeded 1 trillion yuan.
With the further improvement of ecological and environmental protection, the country’s environmental protection requirements for sand and gravel mines have greatly increased and transformed into required transitional landings. It is expected that the trend of rapid elimination of small and micro mines will continue and the industry 佛山桑拿网 will quickly concentrate on leading enterprises.
In recent years, the state’s regulations for mining of sand and gravel mines are mainly reflected in four aspects: first, the strict standardization of mining rights; second, the strict environmental protection policy of the mine; third, the upgrading of mining technology;Advantages, both in terms of mining resources, capital and technical strength, and customer resources, it is logical to vigorously develop the aggregate business. It is expected that the company’s aggregate production capacity will continue to grow rapidly in recent years to achieve the goal of 100 million tons of production capacity.
Earnings forecast and investment grade: We expect the company’s revenue from 2019 to 2021 to be 150.5, 1591, and 167.2 billion U.S. dollars, with an annual increase of 17.
7% and 5.
1%, net profit was 363.
0 and 389.
200 million, an increase of 22 each year.
6% and 3.
2%, EPS is 6.
11 and 7.
34 yuan, corresponding to PE of 19-21 is 5 respectively.
We expect the company’s 19-year sales growth to reach 7%, and the price center will further increase. In the long run, there is room for overseas business, aggregate business and industry integration. At present, the company is only 5 times more than the 19-year PE. We follow the 7-8 times 19PE, giving a reasonable estimate of 48.
88 yuan, pre- “Buy” rating.
Risk warning: sharp increase in demand; sharp decline in cement prices; production safety risks;