by winston » Wed Jul 26, 2017 9:07 am
17 Jul 2017
<Research Report>Deutsche Lifts TPs on CN Cement Stocks; Expects Upcycle to Continue
Deutsche Bank, in its report, said cement pricing in 1H17 has continued its upward trajectory with nationwide cement prices up an average of 32% yearly.
The strong price hikes mean median earnings could rise by about 71% for cement companies under the broker's coverage.
Although cement prices will correct in June and July due to seasonality, the broker has seen signs of price stabilization in some regions.
The broker estimated cement companies in 1H would have already achieved 48% of full year consensus earnings, presenting upside risks to Street earnings upgrades.
While the magnitude of earnings increase will likely decline into 2H, Deutsche Bank said cement prices should still see about 13% growth in 2H.
For 2H17 outlook, Northwest China is the best region in China this year. Both SINOMA (01893.HK) and WESTCHINACEMENT (02233.HK) saw 1H17 volumes grow by over 5% on the back of strong infrastructure investments.
Tight supply has also led to gross profit per tonne improving significantly. Deutsche Bank believed that a more stable earnings outlook and higher dividends support higher valuations.
Source: AAStocks Financial News
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