Main points of investment

Event: the company disclosed results for the first nine months: revenue fell 26.1 per cent year-on-year to HK $17.89 billion; homecoming net profit fell 61.3 per cent to HK $710 million. For Q3 alone, revenue fell 29.2 per cent year-on-year to HK $5.72 billion, while net profit rose 171.1 per cent to HK $89.255 million.

Comments: weak demand, intensified competition in the Guangdong and Guangzhou markets, a sharp decline in average prices, the industry is more difficult to profit.

Quantity: 7Compact August is the traditional cement off-season, September peak season is not prosperous. National cement Q3 production fell 7.6% year-on-year sales of cement & clinker fell 15.8% to 19.06 million tons, sales of self-produced parts fell 16.6% to 18.06 million tons, and Guangdong / Guangxi market shipments fell 15.7% and 34.1% respectively.

Price: the price continues to decline and the market pressure in Guangdong and Guangzhou increases. The unit price of Q3 cement-clinker ton is 268 Hong Kong dollars, down 35 Hong Kong dollars from the same period last year; in RMB terms, it is down about 25 yuan to 241 yuan. The unit price of Q3 Guangdong / Guangxi cement ton is 287 pound 239 Hong Kong dollars respectively, down 34 yuan 24 Hong Kong dollars respectively compared with the same period last year, which is bigger than the month-on-month decline in other regions.

-- cost & gross margin: Q3 costs continued to decline, cement-clinker ton cost fell by HK $40 year-on-year, Q3 ton gross margin increased by HK $6 to HK $22.

The concrete plate continues to be weak. Q3 concrete sales fell 9 per cent year-on-year to 2.42 million cubic metres; unilateral unit price fell 14.4 per cent from a year earlier to HK $395; unilateral cost fell by HK $57 to HK $345; and unilateral gross profit fell by HK $9 to HK $50.

Strict control of fees, only the increase in financial costs, resulting in a year-on-year increase of HK $4.5 per ton three fees. Q3 administrative expenses / sales expenses decreased by HK $120 million and HK $11.38 million respectively compared with the same period last year. Financial expenses were basically unchanged from a month earlier, with an increase of HK $86.01 million over the same period last year, due to the impact of rising interest rates.

Our point of view: the government's counter-cyclical adjustment policy has been further strengthened, and the recent addition of trillion yuan of special treasury bonds is expected to stimulate considerable improvement in infrastructure investment; the area of new real estate construction has leveled off month by month, and cement demand is expected to stop falling and stabilize.

We downgrade our profit forecast and estimate that the company's 23-24-25 revenue will be HK $244.80 million, respectively, compared with the same period last year. The year-on-year revenue will be-240%, 1.8%, 1.7%, respectively, and the net profit of homing will be HK $884 million, 1.29,655 million Hong Kong dollars, respectively, and the target price will be HK $3.60 million.

Risk tips: the deterioration of economic fundamentals, the collapse of industry coordination, and the sharp fluctuation of raw material prices.