HUAXIN CEMENT (06655) has experienced a decline of over 6%, although its stock price has still increased by more than 110% this year. As of the time of this report, the stock is down 5.46%, trading at HKD 15.76, with a transaction volume of HKD 52.41 million. On the news front, HUAXIN CEMENT plans to hold a board meeting on October 24 to approve its quarterly earnings. According to a research report by Guotai Junan Securities, the company's comprehensive gross profit per ton of cement is expected to be around CNY 100 in July and August, compared to CNY 72 in the same period last year. Overall overseas cement profitability remains robust, with significant improvements observed in previously weak areas such as Central Asia this year, while the domestic seasonal price drop has had minimal impact. The firm noted that following the unexpectedly strong consolidation in Nigeria, HUAXIN has plans for independent listings of its overseas assets, which would have limited dilution from the commitments. An independent listing is expected to boost the valuation of overseas cement assets and help accelerate future overseas acquisitions. Market consensus anticipates that HUAXIN will achieve operating profits of CNY 2.7 billion and CNY 3.7 billion for 2025 and 2026, corresponding to P/E ratios of 12 times and 9 times, respectively. In 2026, overseas profitability is expected to contribute CNY 2 billion to CNY 2.5 billion in profit, assuming a P/E of 15 times for overseas segments and 10 times for domestic. The potential market capitalization could reach CNY 50 billion. Additionally, if the domestic market's de-competitive policies prove effective, there will be further upside potential for profitability, and the stock remains a key recommendation.
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