根据数字水泥网，3Q24 华东/华南水泥发货率同比-11ppt/-11ppt，叠加部分区域错峰限产加强管控，我们预计公司3Q24 水泥销量仍有一定幅度的下滑。2）价格及吨盈利预计底部企稳，毛利率有所改善。根据数字水泥网，3Q24 华东/华南水泥均价环比-2%/+2%，我们预计3Q24 公司水泥均价或底部逐步企稳。吨毛利方面，考虑到3Q24 动力煤价格环比基本平稳，我们认为公司吨成本及吨盈利环比基本持平。3Q24 公司毛利率约19.8%，同比/环比+4.4ppt/+0.9ppt，结合收入端降幅，我们认为公司或已进一步削减贸易及其他业务规模。3）吨费用预计相对平稳。我们计算公司3Q24 四项费用合计约24.24 亿元，同比-9.6%，考虑到销量降幅可能接近费用降幅，我们预计3Q24 公司单吨费用同比基本持平。4）公允价值变动损益贡献较大利润。由于9 月末证券市场表现回升，3Q24 公司单季度公允价值变动损益约2.22 亿元，对业绩形成正向贡献。5）现金流延续改善。1-3Q24 公司经营性净现金流103.5 亿元，同比+7%，其中3Q24 单季度净流入34.8 亿元。3Q24 results are in line with our expectations
The company announced 1-3Q24 results: revenue of 68.15 billion yuan, -31% YoY, net profit to mother 5.2 billion yuan, or -40% YoY. Among them, 3Q24 revenue was 22.58 billion yuan, -33% YoY, and net profit to mother was 1.87 billion yuan, or -15% YoY. The company's 3Q24 performance was in line with our expectations.
1) Demand continues to be weak, and sales are expected to remain under downward pressure. According to the National Bureau of Statistics, the country's cement production was -10.7% year-on-year in January-September, with production of -12.4%/-11.9%/-10.3% year-on-year in 7/8/9, respectively.
According to the Digital Cement Network, the 3Q24 East China/South China cement delivery rate was -11ppt/-11ppt, compounded by erroneous peak production limits in some regions to strengthen control. We expect the company's 3Q24 cement sales to decline by a certain margin. 2) Prices and profit per ton are expected to stabilize at the bottom, and gross margin has improved. According to Digital Cement Network, 3Q24 East China/South China cement average price was -2%/+2% month-on-month. We expect 3Q24's average cement price or bottom to gradually stabilize. In terms of gross profit per ton, considering that 3Q24 thermal coal prices were basically stable month-on-month, we believe that the company's ton cost and ton profit were basically flat month-on-month. The 3Q24 company's gross margin was about 19.8%, +4.4pp/+0.9ppt year over year. Combined with the revenue side decline, we believe the company may have further reduced the scale of trade and other businesses. 3) The cost of tons is expected to be relatively stable. We calculate that the total cost of the company's 3Q24 four items is about 2.424 billion yuan, -9.6% year over year. Considering that the decline in sales volume may be close to the cost reduction, we expect 3Q24's cost per ton to be basically flat year over year. 4) Profit and loss from changes in fair value contribute a large amount of profit. Due to the recovery in securities market performance at the end of September, 3Q24's fair value change profit and loss in a single quarter was about 0.222 billion yuan, which contributed positively to the results. 5) Continued improvement in cash flow. 1-3Q24's net operating cash flow was 10.35 billion yuan, +7% year over year, including a net inflow of 3.48 billion yuan in the 3Q24 quarter.
Development trends
Price increases in the Yangtze River Delta have exceeded expectations, and South China is also expected to raise prices. The 4Q results are expected to recover significantly. As mentioned in our report “The Riverside Clinker Plan Has Increased Sharply, and the Industry Shows Determination to Reinstate Prices” at the end of September, the combination of production cuts+price increases in the Yangtze River Delta and surrounding regions may have reflected the industry's unanimous demand for price recovery to reverse losses and restore the industry's healthy ecology and reasonable profits. According to our tracking of recent market prices, the price increase and implementation in East China slightly exceeded expectations. We expect the company's average price and ton profit at the current time to be the same and increase significantly from month to month, and the 4Q24 performance is expected to recover significantly.
Profit forecasting and valuation
We maintain the 2024/25E net profit of 8.1 billion yuan/9.22 billion yuan unchanged. The current A share price corresponds to 2024/25E 17x/15x P/E, and the H share price corresponds to 2024/25E 13x/11x P/E. We maintained that A/H shares outperformed the industry rating. Considering the basic confirmation of the company's profit bottom and the industry's expectations for the sector have been fixed, we raised the target price of A shares by 21% to 32.7 yuan, corresponding to 2024/25E21x/19x P/E, implying 25% upward space; we raised the target price of H shares by 26% to HK$27.7, corresponding to 2024/25E 16x/14x P/E, implying 25% upward space.
risks
Price competition in the industry intensified, and demand declined beyond expectations.
