Tianfeng Securities issued a research report stating that westchinacement (02233) achieved revenue/net income attributable to shareholders of 3.901/0.387 billion yuan in the first half of the year, with a year-on-year decrease of -11.3%/-27.3% respectively. Among them, overseas/domestic revenue was 1.322/2.38 billion yuan, with a year-on-year increase of +9.4%/-25.4% respectively, and overseas/domestic net profit was 0.587/0.068 billion yuan, with a year-on-year decrease of -1.6%/-77.9% respectively. The overall performance decline was mainly due to the drag from domestic business.
The bank stated that the company's overseas net profit in H1 24 decreased by 1.6% year-on-year to 0.587 billion yuan, and the calculated profit per ton decreased slightly by 4% to 398 yuan/ton. The proportion of overseas net profit to total net profit increased by 24 percentage points year-on-year to reach 90%, further highlighting the contribution of overseas performance. On May 21st of this year, the company ignited a 6000t/d cement clinker production line in Uzbekistan. In the first half of the year, the overseas cement production capacity increased by 2.5 million tons year-on-year to reach 7.3 million tons. On August 16th, the 10000t/d cement clinker production line of the Remi National Cement in Ethiopia was ignited, and the company's overseas cement production capacity increased by another 5 million tons. The bank believes that with the gradual release of new production capacity in the second half of this year, the elasticity of overseas profits can be expected. With the gradual production release of Mozambique and Uganda production lines in 2025-26, the company's profitability is expected to reach a new level.
The bank further pointed out that as a leading player in African cement market, the overseas performance of the company has potential. The company's dividend payout ratio has maintained at around 30% in the past three years. Assuming it remains unchanged in 2024, the current dividend yield is approximately 6.4%. After considering the easing of debt pressure in 2026, there is still room for dividend increase. Taking into account the year-on-year decline in the company's profit in the first half of this year, the company's net income attributable to shareholders for 2024-2026 has been slightly lowered to 1.09/1.95/2.79 billion yuan (previous values were 1.21/1.96/2.8 billion yuan). Referring to comparable companies, the bank gives the company a target price of HKD 1.40 based on a PE ratio of 7 times for 2024, and maintains a "buy" rating.
