The cement leader on the roof of the world, the performance is growing rapidly.
As the third pole in the world, the development of cement industry in Tibet Autonomous region lags behind due to natural, ecological and other factors. Tibet Tianlu is the only listed company in Tibet that focuses on infrastructure construction. The three cement companies controlled account for 66.7% of the total cement production capacity in the region, forming an oligopoly with Huaxin cement in the region. The company's cement sales business has grown satisfactorily in recent years. Holding cement companies in Tibet competed for a compound growth rate of 28.9% and 35.6% in revenue and net profit in 2013-2016. The company's revenue and net profit in the first three quarters of 2017 were 25.3 and 330 million yuan, up 30.2% and 92.5% respectively.
Tibet hopes to achieve great-leap-forward development, the demand for cement increases sharply, and the regional cement supply exceeds the demand.
In order to achieve great-leap-forward development and increase infrastructure investment in the region during the 13th five-year Plan period, Tibet is expected to maintain a growth rate of more than 30% in transportation fixed assets investment in the autonomous region, corresponding to a substantial increase in cement demand. A number of highway projects started in 2016, the area is relatively closed and inconvenient, and prices have risen sharply under the shortage of cement supply. It is estimated that after all the new cement production capacity is put into production in 2020, there will still be a supply gap of nearly 7 million tons, the regional cement supply and demand will remain tight, and the price will operate at a high level. In the later period, Tianlu and Huaxin cement companies in Tibet released their new production capacity in an orderly manner, and will continue to benefit from the performance growth brought about by the simultaneous rise in the volume and price of cement in the region.
The process of state-owned enterprise reform is worth looking forward to.
The people's Government of the Autonomous region and China Power Construction signed the Strategic Cooperation Agreement on China Power Construction Group Co., Ltd. to participate in the reform and reorganization of state-owned enterprises in Tibet Autonomous region. China Power Construction has advantages in the development and construction of energy projects in Tibet, and Tianlu Group has advantages in the development and construction of transportation projects in Tibet. The two sides will carry out all-round cooperation and common development from different aspects such as business, management, property rights and so on.
Valuation and rating
In the future, investment in infrastructure construction in Tibet Autonomous region will continue to grow rapidly, which will lead to a relatively rapid growth in cement demand. The company's existing production capacity has been fully released, the new supply has been put into production in an orderly manner, and cement sales are expected to increase steadily. Regional cement supply falls short of demand, the price will maintain a high level, volume and price rise, the company's performance will grow rapidly. It is estimated that the company's EPS in 2017-2019 will be 0.51,0.80,0.99 yuan, with a compound growth rate of 50.4%. It will give the company 15 times the PE level in 18 years, corresponding to the target price of 12.00 yuan, with a "buy" rating for the first time.
Risk Tips:
The growth rate of infrastructure construction investment and cement demand in Tibet is lower than expected; the risk of falling cement prices and rising raw material prices.