Cement Producers

[winston]

UBS Remains Positive On China Cement Sector

1224 [Dow Jones] The decline in cement prices in some regions of China over the past week is due mainly to pressure from newly added capacity, UBS says in a report.

It notes the government's announcement it will extend property-sector tightening further, to some Tier-two and Tier-three cities has hurt sentiment for the cement industry, especially in the H-share market.

But the house expects the impact of the extended restrictions is likely to be weaker than in Tier-one cities as the real living condition, not investment, is the demand driver in Tier-two and Tier-three cities.

In addition, UBS notes the government is determined to enhance hydro/irrigation investment and plans a large-scale inspection of progress on social housing, which it tips could boost cement demand in 4Q.

UBS is still positive on the 2H11 demand outlook and doesn't expect a sharp demand shortfall in the period. It remains positive on the sector, but suggests being more selective, preferring sector plays with relatively cheaper valuations, such as Anhui Conch A-shares (600585.SH) and CNBM (3323.HK).


Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: China Cement Shares Tumble But May Offer Entry Point

1414 [Dow Jones] China cement stocks come under heavy profit-taking pressure with Anhui Conch Cement (0914.HK) falling 5.0% to HK$27.65, while China National Building Material (3323.HK) falls 6.2% to HK$15.68.

Still, this appears to be normal profit-taking amid jittery investor sentiment, and further weakness in the sector may provide an entry point.

CNBM, for example, rallied to a 52-week high of HK$17.58 from a June 20 trough of HK$12.54, a whopping 40% gain. Investors perhaps can eye very roughly one-third retracement as the first entry level, which would be roughly HK$15.65.

Fundamentally, UBS believes a resilient cement price in low season could be a potential catalyst for China cement stocks and it prefers stocks with lower valuation compared with peers; its top pick for H-share cement names are CNBM.

Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: CNBM +0.4%; Buy Cement Stocks On Pullback - SHKF

1001 [Dow Jones] China National Building Material (3323.HK) is up 0.4% at HK$16.50, outperforming peer Anhui Conch Cement (0914.HK) which is down 1.4% at HK$38.95, getting a boost from news CNBM plans to issue up to 1 billion A-shares.

The news is likely to be taken as positive by investors as the proceeds may be used by the company for M&As amid industry consolidation.

CNBM shares have rallied 87.5% year-to-date, amid a sharp improvement in China cement industries' fundamentals.

SHK Financial analyst Daniel So says investors can buy the sector names on pullback, as the upcoming interim results are likely to show robust earnings growth. CNBM volume is modest at HK$69.8 million.

Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: China Cement Stocks Outperform; Strong Earnings

1455 [Dow Jones] China cement stocks continue their recent trading pattern of sharp intraday swing, with sector leaders Anhui Conch Cement (0914.HK) and China National Building Material (3323.HK) both having intraday turnarounds of more than 10%.

The sector's 1H results are expected to be very strong and earnings visibility in 2H remains high, hence is attracting bargain-hunters.

Anhui Conch is up 2.0% at HK$35.85, recovering from its intraday low of HK$32.50;

CNBM rises 0.7% to HK$14.52 vs its HK$13.24 low. Their respective 10-day moving average are 4.0%-5.0% above their current levels, and may act as key near-term caps.

Peers are also outperforming with China Resources Cement (1313.HK) +2.0% at HK$7.07, Shanshui Cement (0691.HK) is up 0.5% at HK$8.73.


Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: Concerns Over China Cement Sector Overdone - GS

0925 [Dow Jones] Goldman Sachs believes the recent market concerns regarding larger-than-expected new capacity additions in China's cement industries are overdone; it says the government's capacity control policy, capex inflation, the difficulty in financing projects and a lack of viable limestone resources raise the entry barrier considerably for new players.

"We remain convinced that 2012 has the potential to be even better for the Chinese cement market as we estimate supply growth will continue to lag demand growth, altering the supply/demand dynamic, and suggesting higher cement prices and profitability in 2012."

GS advises investors to accumulate both Anhui Conch Cement (0914.HK) and China National Building Material (3323.HK). Conch is bid up 1.7% at HK$30.80 at pre-open, CNBM is indicated to rise 3.3% to HK$12.40.


Source: Dow Jones Newswire

[winston]

China Cement

DJ MARKET TALK: Faster China Cement Industry Consolidation Tipped-UBS

1553 [Dow Jones] UBS says a slew of moves recently by big China cement makers indicate "an accelerating trend of industry consolidation."

It says due to the government's monetary tightening policies, small-to-mid-sized cement producers, especially in western low-margin regions, are facing increasing cash flow challenges.

"We believe this provides good consolidation opportunities for the big companies." After benefiting from industry consolidation in eastern and southern China, UBS believes industry leaders will accelerate M&A activity when organic growth is constrained by government policies.

UBS remains positive on the sector due to the structural improvement of the China cement industry with the progress of consolidation; in financial terms, it believes Anhui Conch Cement (0914.HK) is the best-positioned to benefit from further industry consolidation. Conch rallies 5.3% to HK$31.90.


Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: Cement Stocks Down, But Could Be Re-Entry Chance

1110 [Dow Jones] China cement stocks are falling more than the broader market, which is unot surprising given their high beta; for traders who like the yo-yo nature of their trading patterns and believe further downside in the sector is likely to be limited due to valuation support, the sharp pullback may be a chance to re-enter these shares.

Anhui Conch Cement (0914.HK) is down 5.2% at HK$30.15, and has now fallen 10.0% from its Thursday high of HK$33.50;

China National Building Material (3323.HK) is down 4.3% at HK$12.16, and down 11.6% since its Thursday peak of HK$13.76.

UBS says sentiment remains weak, but "we think downside risk is also limited as valuations are cheap and cement prices are stabilising."

It believes the next positive catalyst for the cement sector is a seasonal recovery in demand and prices.

Source: Dow Jones Newswire

[winston]

vested in Anhui Conch & CNBM

DJ MARKET TALK: CS No Longer Expects China Cement 'Super Cycle'

0855 [Dow Jones] Credit Suisse believes the supply/demand outlook of the Chinese cement sector "has incrementally deteriorated," driven by softening demand, combined with higher net new supplies on the back of strong profitability; "we no longer expect a 'super cycle' in 2012, and see downside risk to margins in the coming months."

The house believes earnings upgrades have come to an end after strong 1H11 results, and expects the negative earnings growth outlook for 2012, combined with downside risks to consensus forecasts and relatively rich valuations, will likely lead to underperformance of the sector in the coming months.

"We think the multiple de-rating is partly in place, yet earnings risk is now largely on the downside," it says.

Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: China Cement Stocks Tumble; Profit Growth Doubts

1053 [Dow Jones] China cement stocks are plunging with sector leaders Anhui Conch Cement (0914.HK) and China National Building Material (3323.HK) each falling more than 6.0%, while smaller Shanshui Cement (0691.HK) tumbles 9.7% to HK$6.46, TCC International (1136.HK) is off 6.8% at HK$3.41.

At first glance valuations seem to be dirt cheap with CNBM on 5.7X this year and 4.9X FY12 earnings based on Thomson Reuters consensus, but investors seem to be taking the view that such high expectations for earnings growth are not realistic.

Credit Suisse says its least-favoured stocks in the sector are those with higher peak-margin exposure and sensitive earnings, including CNBM, which it downgrades to Underperform from Outperform, and slashes target price to HK$9.00 vs HK$23.30, as it cuts CNBM's FY11/FY12 earnings estimates by 8%/36% to reflect the weakening industry supply/demand outlook and downside risk to margins in 2012.

Source: Dow Jones Newswire

[winston]

vested in Anhui & CNBM

DJ MARKET TALK: China Cement Stocks Slump; Investor Faith Wanes

1404 [Dow Jones] China cement stocks slump more in the afternoon: Anhui Conch Cement (0914.HK) falls 7.9% to HK$26.90, China National Building Material (3323.HK) tumbles 8.9% to HK$10.60, TCC International (1136.HK) is down 9.3% at HK$3.32, Shanshui Cement (0691.HK) falls 10.8% to HK$6.38.

In addition to concerns on the demand side, "there are also worries on the supply, due to the new supplies coming on stream," says William Lo, an analyst at Ample Capital.

Despite the steep fall (CNBM has plunged 23.0% from last week's high of HK$13.76 hit Sep. 1), Lo is not interested in bargain-hunting, given the likely deteriorating sector fundamentals.

At the current price, CNBM is being valued at 5.6X FY11 and 4.8X FY12 earnings based on Thomson Reuters, indicating that investors don't have much faith in analysts' forecasts.


Source: Reuters