Tower Group (002233): Weather and Limitation Affecting Results Expected to Restore in Second Half

Tower Group (002233): Weather and Limitation Affecting Results Expected to Restore in Second Half

This report reads: The company released its 2019 Interim Report. The Q2 results were affected by the continuous rainy weather and the time limit of high-speed company restrictions on overload. We are still optimistic about the demand outlook for the Guangdong-Hong Kong-Macao Greater Bay Area and maintain the “overweight” rating. Investment points: Maintain “Appreciation “Hold” rating.

Realized operating income 28.

5.9 billion yuan, down 5.

68%; net profit attributable to mothers was 700 million, down 18%.

68%, eps 0.

59 yuan, basically in line with expectations.

Taking into account the continuing impact of the Guangdong Expressway Super Limit, we lower our EPS forecast for 2019-2021 to 1.

30, 1.

49, 1.

71 yuan (-0.

49, -0.

56, -0.

64), maintain target price of 15.

23 yuan, maintaining the “overweight” level.

  In the first half of the year, sales increased by 4.


In the first half of the year, the company achieved an increase in cement clinker sales of 825, an annual increase of 4%.

38%; in the second quarter, the sales volume suffered by the continuous rain and weather in eastern Guangdong dropped by 445, a continuous decline of 8%.


We are still optimistic about the demand potential of the Guangdong-Hong Kong-Macao Greater Bay Area. At the same time, the company’s second stripe line is expected to be put into production by the end of 2019, and the sales elasticity will continue to be highlighted in the future.

  Price and limit over sales led to a decline in performance.

Our average H1 ex-factory price is 329 yuan / ton, a decrease of about 26 yuan / ton; the gross profit per ton is 112 yuan / ton, a decrease of 39 yuan / ton.

Q2 was affected by the continuous rainfall in eastern Guangdong. The average ex-factory price also fell by about 28 yuan / ton to 316 yuan / ton. The Guangdong high-speed load limit caused the cost of ton to increase by 20 yuan / ton, and the company’s gross profit per ton also decreased by about 47 yuan / ton to96 yuan / ton.

The Q2 ton cost was 19 yuan / ton, maintaining the leading level in the industry; the net profit per ton was 42 yuan / ton, down 45 yuan / ton.

We judge that the weather will improve in the second 北京夜网 half of the year and the company’s profitability will promote recovery.

  The company has adopted a medium-term dividend plan and intends to distribute cash dividends for every 10 shares3.

00 yuan, if this dividend is annualized, the company’s current dividend rate is about 5.


At the same time, referring to the company’s “Shareholders’ Income Plan for the Next Three Years (2016-2018)” (used after 2019), after entering the maturity period (replacement of the second-tier completed construction), the company’s cash dividends should not be less than 40% of profit distribution (with significant capitalExpenditure), 80% (without major capital expenditures), and long-term allocation value is prominent.

  Risk reminder: The extension of the industrial chain is not up to expectations, and the risk of exchange rate 无锡夜网 fluctuations.