[ET Net News Agency, 13 June 2018] Anhui Conch Cement (00914) announced on 12 June that
a cargo pier of Tongling Conch (Conch's subsidiary) was instructed to suspend operation by
the local government in May. This was in response to the requirement from the Ministry of
Ecology and Environmental and the Ministry of Water Resources for the clearance and
upgrading of Class A and Class B drinking water source reserves.
Citi Research noted that the company is coordinating other clinker plants within the
group to meet cement production requirement and actively negotiating with the local
government for resumption of operations, plus Jun-Aug is the weak season for cement in
East China.
Net profit for Tongling Conch was Rmb876m in 2017, representing 5.52% of Conch's net
profit.
Citi views the impact should be limited in the near term. The research house maintained
its constructive view on the cement sector on stable demand outlook and effective supply
discipline, and the potential removal of PC32.5 grade cement in July is also positive.
It maintained its "buy" call on Conch, with a target price of HK$53. (KL)