[ET Net News Agency, 7 December 2018] Citi Research lowered its target price for China
Resources Cement (CRC)(01313) to HK$8.3 from HK$11.1 and downgraded its rating to
"neutral" from "buy".
The research house forecast cement demand will fall 2.2% in 2019, led by a slowdown in
property demand, which would be partly offset by infrastructure demand.
On the supply side, Citi expects 14mt clinker capacity to be added in 2019. Supply
discipline is still effective among producers. Infrastructure and property account for 70%
of cement demand in China. It expects weak property sales (-12% in 2019) will translate
into weak new starts (-11% YoY), a key property indicator for cement demand.
Citi forecast cement prices will fall 6% YoY in 2019. It expects CRC's bottom line in
2019 to drop 21% YoY on lower unit ASP and GP assumptions. Citi revised down CRC's 2019/20
earnings forecasts by 23/13%. (KL)