Anhui Conch Cement 0914

[winston]

not vested

Oct 22, 2018

<Research Report>C Suisse Downgrades CONCH CEMENT (00914.HK) to Underperform; TP Cut to $38

Credit Suisse downgraded CONCH CEMENT (00914.HK) from Outperform to Underperform, thanks to easing demand expectations.

Slowing property construction demand will offset rising infrastructure investments, hence exerting pressure on cement prices.

The 2018-2020 earnings forecasts for CONCH CEMENT were revised to RMB29 billion/ RMB23 billion/ RMB19 billion (+3.6%/ -11.4%/ -22.0%) respectively.

CONCH CEMENT's target price was trimmed from $63 to $38.

Source: AAStocks Financial News

[winston]

not vested

CONCH CEMENT(914)

Analysis：

Conch Cement the is principally engaged in production and sale of cement, commodity clinker and aggregate, with clinker production capacity of 246mn tons, the cement production capacity of 335mn tons, the aggregate production capacity of 28.9mn tons, and the commercial concrete of 600,000 cubic meters.

It reported 3Q18 net profit of RMB7.7bn, up by 149% yoy.

ASP rose from RMB316 per ton in 18Q2 to RMB328 per ton in 18Q3.

Due to strong sales of trading platforms, total sales volume in 18Q3 reached 93.9 million tons, rising by 22.6% yoy.

Since the fourth quarter is usually the peak of sales and selling prices, we are bullish on the company`s earnings outlook for 18Q4.

Strategy：
Buy-in Price: $38.55, Target Price: $42.00, Cut Loss Price: $35.00

Source: Phillips

[winston]

not vested

Anhui Conch (914 HK / 600585 CH): Whither cement price growth post 4Q?

Anhui Conch (914 HK/600585 CH) recently reported a 76.8% YoY rise in revenue to RMB32b and a 151% increase in net profit to RMB7.8b in 3Q18, bringing 9M18 net profit to RMB20.7b which was a solid set of results.

Given how cement prices have risen, there have been concerns about the possibility of the Chinese government imposing price caps, which may have contributed to weakness in cement stocks.

Worries over a property slowdown could have also weighed on share prices.

On the other hand, demand support could come from an increase in infrastructure spending from government policies.

With the broader market weakness, valuations have also come off with higher risk premia. As such, we lower our P/B from 1.95x to 1.4x (slightly lower than five-year historical average of 1.5x) and as such as our fair value estimate drops to HK$38.05 for the H-share and RMB29.42 for the A-share.

Maintain HOLD. Looking ahead, we still expect cement prices to stay supported or even increase further in 4Q, driven by the generally low inventory level and stronger demand during the peak season.

Maintain HOLD with a fair value estimate of HK$38.05 for the H-share and RMB29.42 for the A-share.

Source: OCBC

[winston]

not vested

Anhui Conch (914 HK/600585 CH): Along with the market

Since our earlier report on 30 Oct, the share prices of Anhui Conch have seen a decline in the last two months of 2018 followed by a recovery in 2019, such that the H-share is now about 10% higher and the A-share is about 5.5% higher.

Cement price growth since then has varied depending on the region, but the general trend is a slight increase (1.4% rise for national average).

Looking ahead the market would likely look for cues on sustainability of cement price growth, and Anhui Conch as an industry proxy should move in line with China cement prices.

Though there are concerns over a property slowdown which would weigh on cement demand, there are hopes that stronger infrastructure demand would support cement prices going forward.

Meanwhile the street is estimating a 4.6% fall in Anhui Conch’s earnings for FY19 for now, while we are looking at -3%.

Based on 1.6x FY19F book (5-yr historical average is 1.5x), we derive fair value estimates of HK$43.58 and RMB32.21 for the H- and A-shares, respectively.

Maintain HOLD on both A and H shares. Risks include price-caps on cement prices given the earlier surge, weaker-than-expected demand from property developers and delay in infrastructure spending, as well as M&A risks.

Source: OCBC

[winston]

not vested

Conch Cement profit jumps to 29b yuan in 2018

Anhui Conch Cement Company (0914) reported today net profit for 2018 jumped by 87.8 percent year-on-year to 29.85 billion yuan.

The group's revenue amounted to 128.4 billion yuan, rose by 70.5 percent from 2017, and basic earnings per share were 5.63 yuan.

A final dividend of 1.69 yuan per share was proposed.

Shares of Conch Cement surged by 4.2 percent, or HK$1.85, to close at HK$45.95.

Source: The Standard

http://www.thestandard.com.hk/breaking- ... 0321&sid=2

[winston]

not vested

Anhui Conch (914 HK / 600585 CH): Authorities eyeing the sector again

Anhui Conch delivered a 70.5% increase in revenue to RMB128.4b and an 88.1% increase in net profit to RMB29.9b in FY18, such that results were generally within expectations.

The group had earlier issued a positive profit alert indicating its FY18 net profit would increase by 80-100% YoY; prior to the profit alert announcement the street was already forecasting an 83% increase for the year.

A final dividend of RMB1.69 per share was declared, compared to RMB1.20 last year.

Recently, there was news that the government authorities (NDRC) will be meeting with various agencies to gather information on current market conditions in the cement market, and there could be investigations in cement pricing by market players.

As mentioned in our earlier reports, price caps is a potential risk due to the cement price surge, although this is arguably driven by fundamentals to a large extent (lower supply due to market consolidation and environmental restrictions, as well as buoyant demand).

Looking ahead, we roll forward our valuations to blended FY19/20F earnings, and our fair value estimate rises to HK$48.24 for the H-share, while the fair value estimate for the A-share rises to RMB37.11.

Maintain HOLD with a fair value estimate of HK$48.24 for the H-share and RMB37.11 for the
A-share.

Source: OCBC

[winston]

not vested

Anhui Conch (914 HK/BUY/Target: HK$58.27).

1H19 net profit grew 17.7% yoy to Rmb15.3b, beating expectations.

Revenue surged 57% yoy, thanks to the cement trading business, while the core business’ gross margin expanded to 47.4% on a 6% yoy increase in both sales volumes and ASP.

Anhui Conch booked record-high margins in 1H19 and steady regional market improvements.

We raise our target price to HK$58.27 on our higher earnings forecasts, and pegged at an unchanged 9x 2019F PE.

The stock is undervalued, trading at 1.6x 2019F P/B (2019F ROE: 25%) and 7x 2019F PE.

Reiterate BUY.

Source: UOBKH

[winston]

vested

BofAML Upgrades CONCH CEMENT (00914.HK) to Buy with TP Up to $54

Bank of America Merrill Lynch raised CONCH CEMENT (00914.HK)'s 2019-21 earnings forecasts by 3%-4%.

CONCH CEMENT (H-share) was upgraded from Neutral to Buy, with target lifted from $50 to $54.

The broker liked CONCH CEMENT for its 47% and 15% exposure in East and South China, the top-pick regions for demand-supply dynamics.

CONCH CEMENT is also a potential beneficiary of stimulus in infrastructure.

Source: AAstocks.com

[winston]

not vested

Anhui Conch Cement nine-month net profit rises 15pc

Anhui Conch Cement (0941) posted its net profit for the first nine months this year rose 14.96 percent from a year ago to 23.82 billion yuan, and the revenue spiked 42.37 percent to 110.76 billion yuan.

For the third quarter, the net profit rose 10.1 percent to 8.56 billion yuan, while the revenue rose 22 percent year-on-year to 39.11 billion yuan.

Source: The Standard

[winston]

not vested

Anhui Conch (914 HK /BUY/Target: HK$66.90).

Anhui Conch posted 2019 net profit growth of 12.5% yoy to Rmb33.6b, in line with our and market expectations.

This best-ever set of annual results was mainly thanks to rising cement ASPs (+2.6%yoy) and resilient core margins (47.1%).

Net cash position was further built up to Rmb60b (+120% yoy) on a recordhigh net operating cash inflow.

However, dividend payment of Rmb2/share (payout ratio at 31%）came with no surprises.

Anhui Conch remains our top pick in the cement sector for 2020 given its solid fundamentals.

Maintain BUY with a target price of HK$66.90.

Source: UOBKH