Cement Producers

[winston]

DJ MARKET TALK: DB Upbeat About China Cement Industry 2012 Outlook

1446 [Dow Jones] Deutsche Bank says it's now more upbeat about the 2012 outlook for China's cement industry;

While overall demand has been weaker in 2011, it tips signs of a turnaround, with the resumption of suspended infrastructure projects in November and a strong pipeline of new projects in 2012.

"While cement prices have found a bottom, we believe a meaningful rebound in prices will not happen till 2H12."

It suggests buying West China Cement (2233.HK) as the most leveraged player in Shaanxi.

WCC is the cheapest cement counter in our coverage universe, trading at 4.0X FY12 P/E versus the sector average of 7.4X, it adds.

It keeps WCC at Buy with a target of HK$2.16. WCC is flat at HK$1.42.

Source: Dow Jones Newswire

[winston]

not vested

DJ MARKET TALK: Cement Stocks Up; CNBM Better If Risk Appetite Up

1101 [Dow Jones] China cement stocks are rebounding more than the HSI's 2.0% rally, unsurprising given their high-beta trading nature.

Sector leader Anhui Conch Cement (0914.HK) rallies 4.5% to HK$24.55, while China National Building Material (3323.HK) is up 3.1% at HK$9.26.

Citigroup says unless loosening measures are introduced, cement stocks "should trade in lock-step with pricing and GP/ton movements."

It estimates China's cement demand to rise 5.8% in 2012, faster than supply's 4.6% increase, and says Buy-rated CNBM, with a target price of HK$11.00, would be an alternative to Conch if risk appetite increases.

"CNBM could repeat in Southwest China the success it had in consolidating East China."

Source: Dow Jones Newswire

[winston]

not vested

DJ MARKET TALK: CS Stays Cautious On China Cement Industry

1022 [Dow Jones] Credit Suisse believes government policy will continue to underpin positive cement industry supply in the long run, and "help pre-empt oversupply risk, should demand disappoint."

Still, given existing capacity status, the industry will not see supply shortage in 2012, and risk on demand deceleration (driven mostly by a property construction slowdown) would impose pressure on margins.

The house keeps its cautious view on the industry and believes risk is on the downside in 1H12, driven by potential slowdown in construction demand in 2Q12.

Sector leaders Anhui Conch Cement (0914.HK) and China National Building Material (3323.HK) are rated as Neutral and Underperform by CS respectively, with targets of HK$28.00 and HK$9.00.

Conch is down 1.0% at HK$24.65 while CNBM is off 1.3% at HK$9.16.

Source: Dow Jones Newswire

[winston]

not vested

DJ MARKET TALK: China Cement Plays Down; Property Curbs Hurt Demand

0301 GMT [Dow Jones] Chinese cement stocks are lower on falling cement prices, as property tightening measures weigh on sales volume and prices of homes in China.

Anhui Conch Cement Co. (600585.SH) is down 1.5% at CNY14.95, and Tangshan Jidong Cement Co. (000401.SZ) is down 1.1% at CNY15.63.

"The property tightening measures suppressed demand for related construction materials, which will have a material impact on local cement companies' profitability," says Luo Guo, an analyst from Orient Securities in a research note.

Luo adds that the cement and glass sectors will start to pick up in the second half of 2012, as 2013 is the first year in which a new batch of leaders will govern China and capital investment is expected to increase.

Source: Dow Jones Newswire

[winston]

MARKET TALK: Cement Plays Drop Broadly, New Tax Concern

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not vested

PRESS RELEASE: Fitch: China Cement Prices to Dip Further in 2012

The following is a press release from Fitch Ratings:
http://www.fitchratings.com/creditdesk/ ... _id=661129

Fitch Ratings expects China's cement sector to see slightly lower average selling prices, as supply continues to outstrip demand.

Pressure is likely to vary by region, subject to supplier discipline.

In a new report published today, Fitch notes that supplier discipline in eastern China during Q410-Q211 helped stabilise prices. The agency expects other regions to follow this strategy in 2012, but its impact may be muted in the highly fragmented south-western provinces.

Fitch forecasts that demand for cement in China will grow between 4%-10% y-o-y to 2.15-2.3 billion tonnes in 2012, driven by fixed asset investment requirement to achieve China's 2012 GDP growth target of no less than 7%.

Total cement capacity will be approximately 2.6 billion tonnes by end-2012, taking into account new capacity and retired obsolete vertical kiln facilities.

With slightly higher electricity tariffs in 2012, Fitch expects no significant increase in overall cement production costs.

Another key input, thermal coal, is not expected to rise significantly in 2012 given the regulatory price cap of CNY800/tonne for 2012, compared with the nationwide average price of CNY809/tonne.

Given the high capex needed for ongoing capacity expansion, major operators in the sector would continue to experience negative free cash flow.

Fitch's rated Chinese cement suppliers are West China Cement Limited ('BB'/Negative) and
- China Shanshui Cement Group Limited ('BB-'/Stable)

Source: Dow Jones Newswire

[winston]

Carbon Tax

China Shanshui sank 7.8 percent to HK$4.63, while Anhui Conch Cement Co., China’s biggest producer of the material, declined 5 percent to HK$21.05.

China National Building Material Co., a mainland maker of cement and dry wall, dropped 5.8 percent to HK$7.79.

China is considering imposing a stand-alone carbon tax, separate from the environmental carbon dioxide tax, Economic Information Daily reported, citing Su Ming, deputy head of the Ministry of Finance’s research institute for fiscal science.

“There’s some news coming from China that they’re going to charge carbon emission tax, so some sectors are affected, like cement, that emit a lot of carbon,” said Richland’s Au.

Fitch Ratings said it expects lower average selling prices for cement in China as supply continues to outstrip demand.

Source: Bloomberg

[winston]

not vested

DJ MARKET TALK: China Cement Cos Rebound; Carbon Tax Risks Low - HSBC

1532 [Dow Jones] China cement stocks stage impressive intraday rebound: sector leader Anhui Conch Cement (0914.HK) rallies 4.3% to HK$21.95, recovering from its intraday low of HK$20.50; the stock already fell 5.0% Friday.

China National Building Material (3323.HK) is up 2.7% at HK$8.00, rebounding 7.4% from its HK$7.45 intraday low.

The sector was hammered Friday on concern that the possible introduction of a carbon emission tax would hurt sector earnings; HSBC believes the risk from the possible carbon tax levy "should be low" due to its complexity, and despite a potential earnings impact in 2013, it would be positive for leading players as it could hasten industry consolidation if confirmed.

The house keeps its Overweight calls on China Resources Cement (1313.HK) and Shanshui Cement (0691.HK).

Source: Dow Jones Newswire

[winston]

There's always two side to a story ...

DJ MARKET TALK: China Cement Plays Bounce More; Tax Concerns Ease

1107 [Dow Jones] China cement stocks rebound more, led by sector leader Anhui Conch Cement (0914.HK), rising 3.0% to HK$22.65 on top of its 4.5% rally Monday.

The sector took a beating Friday on concerns about the possible introduction of a carbon emission tax, which would hurt industry earnings given that cement firms are among the key producers of carbon dioxide.

Daiwa says measurement of carbon dioxide is a big issue and if the tax is indeed introduced, the initial tax rate should be at a low base; it adds that cement producers could be able to partially pass on the carbon tax to customers.

Also, leading cement producers usually are more energy-efficient in their production process, and if the tax is introduced, smaller companies will struggle even more to survive and industry consolidation is likely to accelerate as a result.

Daiwa keeps its Positive view on the sector.

Source: Dow Jones Newswire

[winston]

not vested

DJ MARKET TALK:China Cement Stocks Retreat But Unlikely To Slide Far

1021 [Dow Jones] China cement stocks are succumbing to profit-taking after their big rally Tuesday, but on trading screens, bids far outweigh selling orders, suggesting plenty of investors are eyeing to buy on any retreats, hence their pullback is unlikely to go far.

Anhui Conch Cement (0914.HK) is down 2.2% at HK$24.50 after rallying 9.9% Tuesday, while China National Building Material (3323.HK) is down 2.0% at HK$8.90.

Haitong International says with the easing macroeconomic policy expected to continue, investors are likely to resume confidence on investment-related cyclical stocks; it remains bullish on the cement industry and is positive on CNBM based on its M&A potential, China Resources Cement (1313.HK) and Shanshui Cement (0691.HK) on their regional advantages.

Source: Dow Jones Newswire