20180718-中国银河国际证券-华润水泥控股-01313.HK-Upgrade_to_BUY_after_a_24__Correction__7.2__Yield_Provides_Downside_Protection_5页_866kb
报告摘要
China Resources Cement [1313.HK] Summary
Core Content
China Resources Cement (CR Cement) has been upgraded from HOLD to BUY by analysts due to a 24% share price correction since the June share placement. The stock is now considered undervalued with a 7.2% 2018E dividend yield, offering downside protection. The valuation is at 7x 2018E PER and 1.4x 2018E PBR, close to its historical average. Analysts expect the share price to rebound as cement demand recovers during the peak season in southern China (late Q3 and Q4).
Main Points
- Valuation Improvement: After the 24% drop in share price, CR Cement's valuation is now more attractive, with a 7.2% dividend yield and trading at 1.4x 2018E PBR, near the historical average.
- Regional Performance: Despite concerns about an economic slowdown in China, the performance of Guangdong and Guangxi, key regions for CR Cement, is stronger than the national average. In 5M2018, fixed asset investment and cement production in these regions grew significantly.
- Fundraising and Growth: The recent share placement of HK$4.18bn is seen as a strategic move for medium-term growth. A portion of the funds will be allocated to the development of prefabricated construction and aggregate businesses, which are expected to offer long-term growth potential.
- Financial Performance: The company has shown improving financial metrics, including increased gross margins and net margins. The recurring EPS has been trimmed slightly due to dilution, but the company is expected to see a substantial increase in 2018E and 2019E.
Key Financials
Income Statement (HK$'000)
| Item | 2015 | 2016 | 2017 | 2018E | 2019E |
|---|---|---|---|---|---|
| Revenue | 20,706,812 | 20,172,719 | 22,861,292 | 30,548,737 | 30,919,282 |
| Gross Profit | 1,564,912 | 1,943,482 | 1,717,455 | 2,000,000 | 2,050,000 |
| Operating Profit | 1,521,303 | 1,860,264 | 1,867,990 | 2,020,015 | 2,144,459 |
| Net Income | 1,521,303 | 1,860,264 | 1,867,990 | 2,020,015 | 2,144,459 |
| Recurring EPS | 0.233 | 0.082 | 0.064 | 1.12 | 1.13 |
Balance Sheet (HK$'000)
| Item | 2015 | 2016 | 2017 | 2018E | 2019E |
|---|---|---|---|---|---|
| Total Current Assets | 7,371,622 | 9,073,871 | 11,895,049 | 17,770,706 | 21,032,482 |
| Total Non-Current Assets | 46,845,128 | 43,082,640 | 44,631,553 | 44,543,731 | 44,300,702 |
| Total Liabilities | 27,231,073 | 25,904,642 | 26,044,161 | 22,758,470 | 21,836,259 |
| Shareholders' Equity | 26,556,891 | 26,006,768 | 30,308,969 | 39,448,604 | 43,455,613 |
Financial Ratios
| Ratio | 2015 | 2016 | 2017 | 2018E | 2019E |
|---|---|---|---|---|---|
| PE (x) | 25.1 | 27.5 | 14.5 | 7.0 | 7.0 |
| PBR (x) | 2.08 | 2.12 | 1.82 | 1.40 | 1.27 |
| EV/EBITDA (x) | 15.2 | 12.9 | 9.2 | 5.2 | 5.2 |
| Net Margin (%) | 7.4 | 7.1 | 11.8 | 20.1 | 20.2 |
| EBITDA Margin (%) | 19.2 | 13.8 | 16.9 | 22.9 | 25.2 |
| Core ROE (%) | 7.5 | 7.1 | 12.7 | 22.5 | 19.1 |
| Net Debt/Equity (%) | 63 | 56 | 39 | 5 | - |
Market and Investment Highlights
- Target Price: HK$10.70 (equivalent to 1.9x 2018E PBR and 9.5x 2018E PER).
- Market Cap: US$7,028m.
- Shares Outstanding: 6,982.9m.
- Free Float: 31.3%.
- 52-Week Range: HK$4.27 to HK$10.38.
- 3-Month Average Daily Turnover: US$46.5m.
- Major Shareholder: China Resources, holding 68.6% of shares.
- Dividend Yield: 7.2% for 2018E.
Analysts and Contact
- Head of Research: Wong Chi Man, (852) 3698-6317, cmwong@chinastock.com.hk
- Research Analyst: Mark Lau, (852) 3698-6393, marklau@chinastock.com.hk
Equity Rating Explanation
- BUY: Indicates that the share price is expected to increase by more than 20% within 12 months.
- HOLD: No clear catalyst, and downgraded from BUY pending clearer signal to reinstate BUY or further downgrade to SELL.
- SELL: Indicates that the share price is expected to decrease by more than 20% within 12 months.
Disclaimer
This report is for institutional clients and does not constitute an offer to buy or sell any securities. The information is based on reliable sources but is not guaranteed. The views expressed may not reflect those of the company or its subsidiaries, and the report is subject to change without notice.
Copyright
No part of this material may be reproduced or redistributed without the prior written consent of China Galaxy International Securities (Hong Kong) Co., Limited.
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