The Zhitong Finance App learned that Huatai Securities released a research report saying that maintaining the “buy” rating of China Resources Cement (01313) will reduce the 2022 net profit forecast by 19.6%, but considering that aggregate production capacity is expected to be concentrated at the end of the year and that it will bring profit contributions from next year, the 2023/24 forecast was raised by 4.4%/9.8%, and the target price was lowered 6.3% to HK$4.02. The steady growth policy has become more aggressive, and cement demand may recover moderately next year. The company achieved net profit attributable to the parent company of HK$33 million (-98% year-on-year) in 3Q22, which is basically the same as Ying Police on October 6.

The bank expects infrastructure investment to maintain strong growth in 2023, the decline in housing investment is expected to slow down, and cement demand is expected to recover moderately in 2023 after falling rapidly in 2022. Compared to other regional markets, South China may still face more supply-side contradictions. The bank expects the region to add 1460/4 million tons of production capacity each year in 2022/23, an increase significantly higher than other regions. In the context of a potential moderate recovery in demand, how to better absorb the increase in supply in the regional market over the past two years will still be an additional variable in this regional market.

According to the report, the company's aggregate project may be expected to usher in a wave of peak production in 4Q22. Large-scale projects, including the Fengkai Dajing Project, are expected to be put into operation, and the aggregate production capacity to be put into operation by the end of 2022 is expected to reach 83 million tons/year. Considering that the supply of aggregates in Guangdong is still tight, the bank expects the aggregate business to bring considerable profit contributions from 2023 and become a new business growth point.