Anhui Conch Cement 0914

[winston]

not vested

COMPANY RESULTS

BUY (Maintained)
Share Price HK$57.40
Target Price HK$72.18
Upside +25.7%
(Previous TP HK$66.90)

COMPANY DESCRIPTION
Anhui Conch Cement Co. produces and sells cement, clinker and aggregates. It is a leading
cement producer in China.

STOCK DATA
Shares issued (m): 1,299.6
Market cap (HK$m): 340,726.3

Major Shareholders %
Conch Holdings 36.7
FY20 NAV/Share (Rmb) 30.34
FY20 Net Cash/Share (Rmb) 8.01

Anhui Conch Cement Co (914 HK)
1H20: Another Solid Set Of Results That Beats Expectation

Anhui Conch posted a 5.26% yoy growth in 1H20 net profit to Rmb16.1b, beating our and consensus expectations.

Despite the high base, COVID-19 outbreak and the flood impact in 1H20, the company saw strong recovery in 2Q20, supported by sales volumes spike and better-than-expected cost control.

Steady margin performance was observed across key regions, and net cash position enhancement continues.

Stay positive on the upcoming peak season. Maintain buy, raise target price to HK$72.18 on
higher earnings forecast.

Source: UOBKH

https://research.uobkayhian.com/content ... 36da8605c9

[winston]

not vested

Conch Cement
Sales volume recovered in 2Q20

Conch Cement’s 1H20 net profit rose 5.3% yoy to Rmb16bn, implying that earnings resumed growth yoy.

Cement and clinker sales volume (ex-trading) also resumed growth in 2Q20 (+9.6% yoy).

Reiterate ADD with a target price of HK$70 (2.11x 2020F P/Bv).

The upcoming peak season from late 3Q on should be a near-term catalyst.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 20AF0795C9

[winston]

not vested

Anhui Conch Cement (914 HK / 600585 CH) - Improving momentum

Anhui Conch is expected to see continued profitability, supported by its leading position in eastern and southern China.

While a slowing domestic economy may affect cement demand, this may be mitigated by the government’s increase in infrastructure spending although a large scale stimulus is not expected.

Anhui has a track record of managing its costs well in the past, which should help in supporting margins during downturns.

Given its strong capital position (in net cash), the company is also positioned to make strategic acquisitions.

Near term risks to monitor include regulatory risks following recent anti-trust meetings between the government and major cement players on the topic of rising cement prices.

Overall, Anhui’s supportive dividend yield and strong balance sheet (in net cash) position makes it a relatively more defensive play.

FY19 dividend payout ratio of 32% improved from previous year’s 30%.

BUY (914 HK) / HOLD (600585 CH).

Source: OCBC

[winston]

not vested

Conch Cement(914)

Analysis：

For the six months ended 30 June 2020, the revenue of Conch Cement (914) amounted to RMB74 billion, representing an increase of 3.30% from that for the corresponding period of the previous year;

The net profit attributable to shareholders amounted to RMB16.06 billion, representing an increase of 5.31%.

On a quarterly basis, the revenue for the second quarter increased 119% to RMB50.8 billion as compared to the first quarter and net profit attributable to shareholders increased 127% to RMB11.15 billion.

Going forward, the Group will focus on the cement business, seize development opportunities, actively seek suitable merger and acquisition targets, and continuously improve the market layout.

At the same time, the Group will accelerate the upstream and downstream industrial chain extension, fully promote the implementation of aggregate projects, steadily expand the concrete business, test-drive its venture into prefabricated construction business, and continuously expand the fields of new commercial activities. (I do not hold the above stock)

Strategy：
Buy-in Price: $57.00, Target Price: $62.00, Cut Loss Price: $54.50

Source: Phillips

[winston]

not vested

Conch Cement
Valuation largely reflects unexciting 3Q20 results

Conch Cement’s reported net profit was Rmb8.65bn, up 1.1% yoy.

After excluding disposal gains, however, recurring net profit in 3Q20 was down about 4% yoy.

We believe the results were slightly lower than market expectations (though in line with our projection), as unfavourable weather led to a 3.2% yoy decline in blended ASP.

We may see a knee-jerk post-results reaction, but we believe the correction of about 14% in the past three months reflects concerns about the 3Q20 performance.

The current P/Bv of 1.24x FY21F is slightly more than 1 s.d. below the historical average. Potential price hikes should still attract investors to revisit the stock.

Reiterate ADD with a TP of HK$70 (1.8x FY21F P/Bv).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... C68AC8392F

[winston]

not vested

Anhui Conch Cement (914 HK / 600585 CH) - 9M20 earnings in line

Anhui Conch is expected to see continued profitability, supported by its leading position in eastern and southern China.

While a slowing domestic economy may affect cement demand, this may be mitigated by the government’s increase in infrastructure spending although a large scale stimulus is not expected.

Anhui has a track record of managing its costs well in the past, which should help in supporting margins during downturns.

Given its strong capital position (in net cash), the company is also positioned to make strategic acquisitions.

Near term risks to monitor include regulatory risks following recent anti-trust meetings between the government and major cement players on the topic of rising cement prices.

Overall, Anhui’s supportive dividend yield and strong balance sheet (in net cash) position makes it a relatively more defensive play.

FY19 dividend payout ratio of 32% improved from previous year’s 30%. BUY.

Source: OCBC

[winston]

not vested

Anhui Conch Cement Co (914 HK)
2020: Solid Results Beat; Cash Cow With Stable Dividend Payment

Anhui Conch's 2020 net profit grew 4.6% yoy to Rmb35.2b, in line with expectations.

Self-produced cement products margin remained resilient at 47.6%, with unit
production cost cut (-4.2% yoy) offsetting the decline in cement ASP (-3.4% yoy).

Net cash rose further to Rmb78b (+31% yoy).

Dividend payout remained stable at 32.0%.

Anhui Conch remains our top pick in the cement sector, given solid fundamentals.

Maintain BUY, with target price of HK$61.89.

Source: UOBKH

https://research.uobkayhian.com/content ... 3b6c73fe0e

[winston]

not vested

Valuation

Our H-share TP of HK$60 is based on 1.5x FY21F P/BV, pegged to its historical average during 2016-2020, against its ROE which is expected to remain stable over 2021-2022.

The stock also offers a net dividend yield of >6%.

Our TP for Conch A-shares is RMB55, pegged to 1.6x FY21F P/BV.

Source: DBS

https://www.dbs.com.sg/treasures/aics/s ... 914_HK.xml

[winston]

vested

Anhui Conch Cement (914 HK / 600585 CH) - Modest guidance

Anhui Conch is expected to see continued profitability, supported by its leading position in eastern and southern China.

While a slowing domestic economy may affect cement demand, this may be mitigated by the government’s increase in infrastructure spending although a large scale stimulus is not expected.

Anhui has a track record of managing its costs well in the past, which should help in supporting margins during downturns.

Given its strong capital position (in net cash), the company is also positioned to make strategic acquisitions.

Near term risks to monitor include margin pressures and pace of volume sales ahead.

Overall, Anhui’s supportive dividend yield and strong balance sheet position makes it a relatively more defensive pick although there is room for improvement in its ESG track record which has lagged industry peers.

FY20 dividend payout ratio of 32% was flat from previous year. BUY (914 HK) / HOLD (600585 CH).

Source: OCBC

[winston]

not vested

Anhui Conch Cement (914 HK / 600585 CH) - Modest 1Q due to higher costs

Anhui Conch is expected to see continued profitability, supported by its leading position in eastern and southern China.

Anhui has a track record of managing its costs well in the past, which should help in supporting margins during downturns.

Given its strong capital position (in net cash), the company is also positioned to make strategic acquisitions.

Near term risks to monitor include margin pressures and regulatory risks (previous anti-trust meetings between the government and major cement players on the topic of rising cement prices).

Overall, Anhui’s supportive dividend yield and strong balance sheet position makes it a relatively more defensive pick although its ESG track record has lagged industry peers.

FY20 dividend payout ratio of 32% was flat from previous year, with room for improvement given its net cash position. BUY (914 HK) / HOLD (600585 CH).

Source: OCBC