GTHT has initiated coverage of WESTCHINACEMENT (02233), assigning an "Accumulate" rating. The firm forecasts the company's net profit attributable to shareholders for the years 2025-2027 to be approximately 1.143 billion, 1.422 billion, and 2.015 billion RMB respectively, with earnings per share (EPS) of 0.21, 0.26, and 0.37 RMB. Considering the company's strong growth potential as a leader in overseas expansion, and in reference to comparable companies, GTHT has established a price-to-earnings (PE) ratio of 13 times for 2026, yielding a target price of HK$3.72 (based on an exchange rate of 0.91 RMB to 1 HKD), as well as a price-to-book (PB) ratio of 1.3 times for the same year, resulting in a target price of HK$3.74. For prudence, the target price is set at HK$3.73.

Key insights from GTHT: As a leading cement producer in Shaanxi proactively expanding overseas, Mr. Zhang, the largest shareholder, possesses approximately 32.3% ownership (both direct and indirect) while Conch Holdings holds 29.0%. By the end of 2024, the company is expected to sell 15.74 million tons of cement domestically (1.32 million tons from Shaanxi), generating revenue of about 5.2 billion RMB and a profit of approximately 350 million RMB. Additionally, overseas sales are projected to reach 4.03 million tons, generating about 3.2 billion RMB in revenue and roughly 890 million RMB in profit, highlighting the company's successful overseas profit generation.

With domestic cement production declining since 2022, the need to venture abroad has become imperative. The weak domestic demand has led to challenges in maintaining supply-side price stability, resulting in a significant drop in domestic cement prices. The company anticipated this trend and launched its overseas strategy in 2020, establishing its first production line in Mozambique and expanding to a new country each year. By the end of 2024, the company had established a presence in Mozambique, the Democratic Republic of Congo, Ethiopia, and Uzbekistan, demonstrating a strong commitment and timely execution of its overseas strategy.

In line with its commitment to overseas expansion, the company reported a gross profit margin of 288 RMB per ton for its overseas operations in 2024, significantly higher than the 42 RMB per ton achieved domestically. In June 2025, the company announced plans to sell its Xinjiang cement assets for 1.65 billion RMB, an action positioned to alleviate debt pressures and support overseas expansion initiatives (including new projects in Uganda, acquisitions in the Democratic Republic of Congo, production lines in Zimbabwe, and future developments in northern Mozambique and Angola).

Risk factors include exchange rate risks, foreign exchange control risks, and rising cost pressures.