Conch Cement (600585): 3Q sales exceed expectations 4Q19 profit is expected to hit a record 杭州夜网 high

The 3Q19 results exceeded the market and we expected Conch Cement’s 3Q19 revenue of 391.

100 million, previously + 22%; net profit attributable to mother to 85.

56 trillion, ten years +10.

1%, MoM-6.

8%, exceeding the market and our expectations (about 8 billion US dollars), mainly due to higher-than-expected sales growth.

Opinions: 1) Strong sales volume exceeded expectations: The company’s 3Q19 self-上海夜网论坛produced cement sales volume increased by 12% to 8613, exceeding market expectations; 2) Off-season price, gross profit per ton slightly decreased: 3Q QoQ corresponding to 9 yuan and 23 yuanTo 318 yuan, usually 3Q19 tons of gross profit is inserted into 3 yuan alternately, compared to 21 yuan to 143 yuan.

3) 3Q net financial income increased by 1.

950,000 yuan, mainly due to the company’s further increase in net cash scale.

After excluding financial net income, the 3Q19 ton cost was basically flat at 27 yuan.

4) The company’s 3Q investment income increases by 2 every year.

51 ppm was mainly due to the annual increase in wealth management products and long-term equity investment income.

5) Outstanding cash flow performance.

The company’s operating cash flow and free cash flow in 3Q19 were 115.

100 million and 86.

800 million, an increase of 32 each year.

4% and 10.


  Development trend East China is booming, pushing up smoothly and raising its 4Q profit forecast.

We will take into account the sharp increase in cement prices in the Yangtze River Delta during the peak season last year. The average base price of 4Q18 cement is relatively high. It is expected that the average market price of the company’s core market in 4Q19 will be based on a narrow margin.

However, from the situation since September, East China cement shipments have basically maintained full production and sales, the regional cement storage capacity ratio has remained at a low level, and the price increase has been smooth.

At present, the third round of price increases in parts of Zhejiang, Jiangxi, and Fujian has been continuous. The fourth round of growth has started in some markets, and the pace of price increases has exceeded market expectations.

We believe that the company’s 4Q19 performance is expected to exceed positive growth and hit a record high in a single quarter.

  Cash flow performed well.
Follow the step-by-step capital expenditure indicator of 100 million (1? 19?
(3Q expenditure is about $ 6 billion), we estimate that free cash flow is expected to exceed $ 25 billion, corresponding to a return on free cash flow of 11.

3%; net cash at the end of the year is expected to exceed 55 billion yuan.

Based on a conservative calculation of 30% of the dividend ratio, the current 19e dividend rate corresponds to 4 +%.

  Earnings Forecasts and Estimates We have raised the company’s 2019e / 20e EPS 3 due to the revised sales assumption.

9% and 8.

3% to 6.


77 yuan.

The current A shares correspond to 2019 / 20e 6.

7x / 7.

3x P / E, H shares 2019 / 20e 6.

6x / 7.

2x P / E.

Maintain outperforming industry and maintain A-share target price of 48 yuan, corresponding to A-share 2019 / 20e 7.
7x / 8.
3x P / E; Maintain H-share target price of HK $ 57, corresponding to H-share 2019 / 20e 8.

1x / 8.

8x P / E, A / H share target price corresponds to 15% / 23% upside.

  Risks The demand in 2020 is less than expected, and the impact of capacity replacement on the industry exceeds expectations.