Huaxin Cement (600801): Better-than-expected improvement in the cost side further consolidated the foundation for growth

Matters: On August 24, 2019, the company released its 2019 interim report, and the company achieved operating income of 143 in the reporting period.

870,000 yuan, an annual increase of 21.

07%; net profit attributable to shareholders of the listed company is 31.

6.3 billion, an increase of 52 over the same period last year.

93%; Blacks earn 1.

51 yuan.

  Comment: In the first half of the year, cement demand was better. The company increased its sales of cement and clinker 3559 in 1H19.

74 for the first time, growing 10 per year.

69%; aggregate 779 sold.

41 for the first time, growing 27 each year.

74%; sales of concrete 176.

77 for the first time, growing by 18 per year.

72%; the amount of treatment for various types of hypertension into the kiln reached 99.

9 growth rate, at least 46%.

In the first half of 2019, driven by the rapid growth of real estate investment and the policy of supplementing shortcomings in infrastructure, the total cement output further increased6.

8%, the first rapid increase in cement demand in developing countries after entering the platform period, so the company’s product sales also showed a rapid growth trend.

  By quarter, Q2 achieved revenue of 84.

110,000 yuan, an increase of 14 in ten years.

07%, net profit attributable to mother 21.

USD 5.2 billion, an annual increase of 39.


The product’s comprehensive gross profit margin increased, and the company’s ability to control costs was very strong. The product’s comprehensive sales price rose and cost control was good during the reporting period.

75%, an increase of 3 over the same period last year.

99 averages, net sales margin 24.

28%, up 5 per year.

23 quarters; of which Q2 single quarter gross margin increased by 5 compared with Q1 gross margin.

Two averages, net profit margin increased by 5 compared with Q1.

91 single ones, the first of which is because the company performs lean production to control costs, and cost of sales replaces 58.

52%, a decline of 3 per year.


The period expense ratio dropped, the asset-liability ratio hit a new low, the company’s steady operation report gradually, and the company period expense ratio was 11.

42%, a decline of 2 per year.

31 units; of which the sales expense ratio is 6.

03%, down 0.

48 units; management expense ratio 4.

31%, a decrease of 0.

76 units; financial expense ratio 1.

08%, down 1.06 averages.

The decrease in the cost rate baseline was due to a 38 per drop in financial costs.

At 81%, the company’s interest-bearing debts decreased, interest expenses decreased, and its operations continued to be stable, of which assets and liabilities decreased by 39.

76%, each of the company ‘s lowest records has been completed and put into operation, the environmental protection processing capacity has been continuously improved, reports on the cement production capacity exceeding 100 million, the company ‘s Yunnan Jianchuan, Jinghong, Kaiyuan, Lincang and other aggregate projects have been completed and put into operation.450 annual aggregate production capacity; Zhaotong, Yunnan, Shiyan, Hubei, Wuhan Changshankou and other domestic waste pretreatment projects and Hubei Yichang sludge disposal project are put into operation, and environmental protection business disposal capacity is increased by 134 per year.

In addition, the company’s Yunnan Fumin 5 / year high-grade, automatic anti-leakage energy-saving special mortar project has also been put into operation.

  In the first half of the year, the company has nearly 200 molecular companies in Hubei, Hunan, Yunnan, Sichuan, Guizhou, Guangdong, Henan, Chongqing, Tibet and other provinces and cities in Tajikistan and Cambodia. The cement production capacity is nearly 100 million tons per year.Concrete 23.3 million cubic meters / year, aggregate 2950 oxides / year, comprehensive environmental protection wall material1.

200 million pieces / year, cement equipment manufacturing 5 tons / year, mortar 10 tons / year, 500 million cement bags / year, and a total capacity of 550 tons / year (including under construction).

Maintain “Buy” rating. It is expected that from 2019 to 2020, the company’s operating income will be 32.3 billion yuan, 33.8 billion yuan, and 35.2 billion yuan, respectively, an increase of 17.

5%, 4.

8%, 4%; net profit attributable to mothers is 70.

0 billion, 71.

100 million, 73.

400 million, an increase of 35 each year.

1%, 1.

6%, 3.


The EPS is expected to be 3 in 2019-2021.

34 yuan / share, 3.

39 yuan / share and 3.

50 yuan / share, corresponding PE is 6/6 / 6x.

The company’s cost-side improvement effect is significant, maintaining a reasonable estimate23 based on 7-9 times PE in 19 years.


The judgment of 06 yuan maintains the “Buy” rating.

Risks indicate the risk of fluctuations in the price of raw materials; the risk of bad debts of accounts receivable; the risk of a decline in the real estate market.