Conch Cement (600585): Expense rate drops again in Q3 and off-season exceeds expectations
Event Overview Conch Cement released the third quarter report of 2019.
The company achieved operating income of 391 in Q3 2019.
10,000 yuan, an increase of 22 in ten years.
0%, to achieve a net profit of 85.
6 trillion, an increase of 10 in ten years.
In the off-season, prices have fallen slightly, and the expense ratio has dropped again.
We think the company’s performance exceeds market expectations.
In the third quarter of 2019, the national cement demand remained strong. We estimated that the company’s self-produced and sold cement clinker in Q3 was about 8,600 tons, a cumulative increase of about 12%, an average of 312 yuan / ton per ton, and an increase of 10 yuan / ton alternately.21 yuan / ton, gross profit of 143 yuan / ton, alternating 5 yuan / ton above, offset 18 yuan / ton from the ring, the drawback in the off-season is limited.
At the same time due to the decline in ton and three fees and non-recurring gains and losses (including financial interest income in the first three quarters).
8 trillion, this subject is expected to gradually increase and continue to reduce the expense ratio), the company’s Q3 ton net profit of 103 yuan / ton (without considering minority shareholders, considering non-operating income), more than 2 yuan / ton.
The maritime model promotes market order in East China.
According to our calculations, the company’s 2019Q3 cement clinker trade volume was replaced by 2730, an annual increase of 60.
At 6%, the undersea model is further deepened.
The reduction of clinker take-out by large enterprises has also strengthened the industrial coordination in East China and reduced the drawback of cement prices during the off-season.
Aggregate business is advancing rapidly.
The company’s 2019Q3 aggregate business revenue continues to grow at a rapid rate, and progresses towards the goal of 100 million tons of aggregate production capacity in 2020.
At the same time, through the gradual manifestation of high-quality mine resource barriers, we believe that the aggregate business is expected to become a new growth point for the company.
Investment suggestion: We maintain the company’s self-produced and self-sold cement business tonnage gross profit assumptions unchanged, and raise the company’s cement trading business income assumptions and non-recurring profit and loss assumptions for 2019-2021.
Taking into account the maximum profit of the cement trading business, we have only slightly raised our 2019-2021 net profit forecast2.
6% / 2.
6% / 2.
6% to 328.
6杭州桑拿网00 million, an increase of 10 in ten years.
1% / 2.
5% / 2.
Based on the company’s 2020 net profit forecast of 8x PE (which is basically consistent with the industry average estimate), the company’s target price is raised by 2.
6% to 50.
80 yuan, maintain “Buy” rating.
Risks remind that the adjustment of real estate policy is stricter than expected, causing demand to exceed expectations and systemic risks.