| HONG KONG/SINGAPORE
HONG KONG/SINGAPORE Oct 29 China's main cement
producers, such as Anhui Conch , are
expected to resume profit growth this year, boosted mainly by
infrastructure and property investments in the country's
bustling eastern and southern regions.
Top cement firms are expected to benefit from construction
projects in eastern provinces such as Jiangsu and Zhejiang and
Guangdong in the south, and a government push to consolidate the
After posting profit declines last year, cement firms such
as Anhui Conch Cement Co Ltd, Asia Cement China Holdings Corp
and Huaxin Cement Co Ltd, are expected to
return earnings growth for the full year as low coal prices have
helped reduce production costs.
So far, major listed cement makers have posted strong
nine-month results, with several doubling profits from last
"We continue to prefer east China and south China, where we
see higher margins. We believe the market in north China will be
stable with low margins," CLSA said in a report.
However, analysts warn that a significant cooling in China's
red-hot property sector, a slowdown in railway investments and a
bigger-than-expected rebound in low coal prices could take some
shine off cement makers' prospects.
Some analysts have also warned the strength in certain
infrastructure investments could result in a buildup of
"In the short term, we expect cement ASPs (average selling
prices) will likely peak out earlier than market expectations,
as we believe supply-demand dynamics are worsening, the slowdown
in railway fixed-asset investment more than offsets the marginal
property FAI improvement," Nomura said in a report.
The latest to announce results was Anhui Conch, which
produces and sells cement and clinker, and is the largest Hong
Kong-listed Chinese cement maker.
It posted a 37 percent rise in nine-month net profit to 5.38
billion yuan ($884.3 million), outpacing 4.3 percent growth in
the first half and a sharp reversal from a 45 percent fall seen
in 2012 earnings.
Anhui Conch, which has a strong presence in China's eastern
and southern regions, attributed the profit rise to rising
selling prices that resulted in higher overall sales.
Also citing strong sales and lower production costs, Asia
Cement reported a 166 percent jump in January-September net
profit to 391 million yuan, while Huaxin Cement's earnings rose
131 percent to 558 million yuan.
Smaller player Gansu Qilianshan Cement Group Co Ltd
saw its net profit surge 118.5 percent to 365.32
million yuan during the period.
With the latest results, cement firms look set to end the
year with strong growth.
Anhui Conch, which analysts say ranks second with about an 8
percent market share in China - just after China National
Building Material Co Ltd - is expected to post a net
profit of 8.4 billion yuan in 2013, according to the average
estimate on Thomson Reuters I/B/E/S.
That would be up by a third from 6.3 billion yuan in 2012
when net profit fell 45 percent.
(Reporting by Meg Shen in HONG KONG and Chyen Yee Lee in
SINGAPORE; Editing by Jeremy Laurence)