20180612-中国银河国际证券-华润水泥控股-01313.HK-Time_to_take_a_breather__Downgrade_to_HOLD_5页_866kb

报告摘要

China Resources Cement (1313.HK) Summary

Core Content

China Resources Cement (CR Cement) has been downgraded from a BUY to a HOLD rating. This decision is based on the company's current valuation and limited upside potential in the near term despite a positive profit alert for the first half of 2018 and a slight upward revision in profit forecasts.

Main Points

Positive Profit Alert: CR Cement reported a significant year-over-year increase in net profit for 1H2018 due to higher cement prices. The blended ASP (average selling price) for cement and clinker rose from HK $290.5/tonne in 5M2017 to HK $387.4/tonne in 5M2018.
Revised EPS and Target Price: The recurring EPS for 2018E and 2019E was raised by 3.8% and 3.9% respectively. The target price was increased from HK $10.40 to HK $11.05, representing a PBR of 2.05x and a PER of 9.3x for 2018E.
Valuation Considerations: After a rally of over 90% year-to-date, the current PBR of 1.91x for 2018E is no longer considered attractive, as it exceeds the historical average since 2009 by more than one standard deviation.
Price Outlook: The upcoming rainy season in southern China is expected to cap cement prices, limiting near-term earnings growth.
Investor Recommendation: Investors may consider switching to alternative stocks like Conch Cement (0914.HK) and CNBM (3323.HK), which offer greater upside potential of over 20% based on target prices.

Key Financials

Income Statement Highlights

Metric	2015	2016	2017	2018E	2019E
Recurring Net Profit (HK$m)	2,055	1,878	3,567	7,801	7,839
Recurring EPS (HK$)	0.31	0.29	0.55	1.19	1.20
Gross Margin (%)	24.0	27.4	30.8	39.0	39.2
Net Margin (%)	7.4	7.1	11.8	20.0	20.0
EBITDA Margin (%)	16.5	20.2	24.2	33.5	33.3

Balance Sheet Highlights

Metric	2015	2016	2017	2018E	2019E
Total Assets (HK$m)	54,216.75	52,156.51	56,526.60	60,092.62	63,056.17
Total Liabilities (HK$m)	27,231.07	25,904.64	26,044.16	24,751.34	23,822.52
Shareholders' Equity (HK$m)	26,556.89	26,006.77	30,308.97	35,233.58	39,191.33
Net Debt/Equity (%)	63	56	39	16	1

Cash Flow Highlights

Metric	2015	2016	2017	2018E	2019E
Net Operating Cash Flow (HK$m)	4,833.64	4,111.74	6,612.95	11,387.80	9,718.52
Net Investing Cash Flow (HK$m)	-4,641.88	-1,671.34	-1,888.25	-1,161.00	-824.00
Net Financing Cash Flow (HK$m)	-2,245.11	-1,034.60	-2,791.47	-6,510.75	-4,919.74

Valuation Metrics

Metric	2015	2016	2017	2018E	2019E
PE (x)	32.8	35.9	18.9	8.6	8.6
PBR (x)	2.54	2.59	2.22	1.91	1.72
EV/EBITDA (x)	18.0	15.3	10.9	6.1	6.1

Market and Investment Context

Market Cap: US$8,592m
Shares Outstanding: 6,532.9m
Auditor: Deloitte
Free Float: 26.6%
52-Week Range: HK$3.76 - HK$10.38
3-Month Average Daily T/O: US$22.7m
Major Shareholder: China Resources Holdings (73.0%)

Analysts

Wong Chi Man – Head of Research
Mark Lau – Research Analyst

Investment Outlook

Current Valuation: The company's PBR is now above the historical average since 2009 by more than one standard deviation, indicating that it is no longer a bargain.
Valuation Gap: The PBR gap between CR Cement and Conch Cement has narrowed to less than 10%, making Conch Cement more attractive.
Upside Potential: Limited near-term upside for CR Cement due to the rainy season. Further positive momentum may come from developments in the Greater Bay Area and a stronger-than-expected price hike during the peak season in late Q3 and Q4.

Disclaimer

This report is for institutional clients and does not constitute an offer or solicitation to buy or sell any securities. It is based on information believed to be reliable, but no guarantees are made regarding accuracy or completeness. Past performance is not indicative of future results. Investors are advised to consult their financial advisers before making investment decisions.

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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