[ET Net News Agency, 11 September 2018] USB Global Research initiated coverage of the
China cement sector with a positive view. However, the market seems doubtful about
earnings sustainability, while UBS is positive for the next one to two years.
The research house expects: (1) resilient demand in key regions such as East and South
China, based on its outlook for strong infrastructure and property investment; (2)
disciplined capacity expansion due to stricter capacity swap policies and environmental
regulations; and (3) falling coal ASPs that would support stable cement ASPs and US dollar
margins.
It said the current 1.3x 12-month forward P/BV of cement companies seems inexpensive on
UBS's much higher and sustainable ROE estimates of 21% in 2018-19 compared with 16% over
2010-17.
Name Rating Target Price
---------------------------------------------
CR Cement (01313) Buy HK$10.96
Conch Cement (00914) Buy HK$56.49
CNBM (03323) Buy HK$9.28
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03323 CNBM
Nominal 
2.900 +0.010 (+0.346%) Others
11/09/2018 16:55
[I-bank focus]USB starts China cement sector with "positive"
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