The Zhitong Finance App learned that Societe Generale Securities released a research report stating that it maintains the “prudent increase in holdings” rating of Western Cement (02233) and expects net profit of HK$14.2/16.5/1.95 billion in 2022-24, compared to -10.7%/+16.8%/+18.2%, with a target price of HK$1.25. Although the commencement of some infrastructure projects in Shaanxi has been delayed, it is expected that they will be able to start smoothly by the end of the year. These projects will mainly pass through the radiated area of the company's base, providing strong support for their demand. At the same time, it has also entered a strategic harvest period in Africa. The local business has an excellent pattern of high profits. Mozambique has already seen significant profits, and the second growth is already taking shape; the other two projects will start contributing profits in 2023/24. At that time, their contribution performance may surpass domestic and foreign opportunities, and will usher in a period of resonance of opportunities at home and abroad.

According to the report, the Q3 revenue of Yaobai Special Cement Group, a subsidiary of Western Cement, fell 5.2% year on year. The cement sector was burdened by high costs. The commercial mix, aggregate, and water reducer businesses contributed incremental gross profit, and gross margin increased 2.1ppt to 20.7% year on year. Furthermore, the company's Mozambican project has an annual production capacity of 2 million tons. It has already seen huge profits in the first half of 2022. The annual profit is expected to exceed 400 million yuan. The Congolese gold project has an annual production capacity of 1.5 million tons and will be put into operation in 22Q4. The local cement price is higher, and it has its own coal and electricity, making it more profitable; the Ethiopian 10,000 ton line project is under construction. It is expected to be put into operation in 2023 and contribute profits in 2024. There is a gap in local demand, cement prices are relatively good, and the company took the lead in laying out along the Belt and Road, ushering in new opportunities for development.