1. Company overview: Shaanxi cement bibcock

two。 Supply: Shaanxi has no new production capacity in the future, and the competition pattern is good.

3. Demand: the net inflow of population drives long-term demand, and the construction of Guanzhong urban agglomeration speeds up the landing of infrastructure.

4. Company analysis: profit continues to improve, dividend rate is expected to increase

5. Profit forecast and valuation

Valuation: horizontal comparison of the company's valuation is the lowest in the cement industry

With reference to the peer valuation, we give Western cement PE5~6 times in 2019, with a reasonable value range of HK $1.93 to HK $2.32 per share.

Valuation: DCF reasonable valuation is more than the current price premium

Under the DCF valuation, the company can recover the investment cost (that is, the current market value) by accumulating free cash flow in the next 3-4 years.

DCF valuation: the reasonable market value of the company is 12.2 billion yuan, a premium of 104% over the market value of 6 billion yuan (August 14, 2019).

6. Risk hint

1. Regional infrastructure projects are sufficient, but it is necessary to observe the investment or financing capacity of local governments.

two。 The economic changes in the peripheral areas are worthy of attention, and the excessive price differences between regions will bring external shocks.

3. Need to continue to pay attention to the scale of loans receivable, financial leasing business also has certain risks, if the business produces bad debts will significantly affect the current profits.