Investment Rating - The report maintains a "Buy" rating for Western Cement (02233) with a 6-month outlook [19] Core Views - Western Cement's overseas profitability elasticity is expected to materialize by 2025, driven by capacity ramp-up and price increases in key markets [3][10] - The company's overseas operations, particularly in Ethiopia, are expected to see significant price increases and stable profitability, with domestic prices also projected to rise [6] - Western Cement's capacity expansion in Africa, including new projects in Ethiopia, Mozambique, Uganda, and Zimbabwe, positions it well for future growth [7] - The African cement market offers substantial growth potential, with Western Cement being one of the few major Chinese players actively expanding in the region [15] Price and Profitability - In Ethiopia, cement prices are expected to increase following the government's decision to allow manufacturers to choose their distributors, reducing the impact of currency fluctuations on profits [6] - Mozambique and Congo regions maintain high cement prices at 150+/ton respectively, while Uzbekistan prices are stable at $50/ton [6] - Domestic prices in China are expected to recover to around 300 RMB/ton in the second half of the year, with full-year average at 250 RMB/ton, and further price increases anticipated in 2025 [6] Capacity Expansion - Western Cement's Ethiopia Lemi project, with a design capacity of 3 million tons of clinker and 5 million tons of cement annually, is operational and considered the most advanced cement project in Africa [7] - Congo's sales are expected to increase from 167,000 tons in 2023 to 700,000 tons in 2024 due to improved logistics [7] - The company plans to expand with new projects in Mozambique (2.5 million tons), Uganda (2.5 million tons), Zimbabwe (2 million tons), and Ethiopia Phase II, with some projects expected to be operational by 2025 [7] Market Potential - Africa's per capita cement consumption is less than 0.3 tons, indicating significant growth potential compared to China's historical levels [15] - Western Cement is one of the few major Chinese cement companies actively expanding in Africa, with limited competition from other players like Huaxin Cement [15] - The company's valuation is considered attractive at 0.64x PB, compared to Huaxin Cement's recent acquisition of a Nigerian company at 2.2x PB, suggesting potential for significant market value appreciation [15] Financial Projections - Western Cement is projected to achieve net profits of 1.09 billion RMB in 2024, 1.95 billion RMB in 2025, and 2.79 billion RMB in 2026 [15] - The company's PE ratios are expected to be 6.2x, 3.5x, and 2.4x for 2024, 2025, and 2026 respectively [15]
西部水泥：更新：埃塞复价+产能持续爬坡，25年海外盈利弹性有望兑现