Hong Kong-listed China cement stocks extended their rally in the afternoon, with sector leaders Anhui Conch Cement and China National Building Material setting 52-week highs. The sector is spurred by Asia Cement (China) guiding that its 1H11 net profit will increase by 350% YoY, suggesting that despite busy upward sector earnings forecast revisions by analysts over the past few months, consensus earnings are likely still conservative. According to the company, new dry-process cement kilns were put into operation in its workshops and those of its subsidiaries. Production and sales volume increased accordingly, with the average selling price of its products rising from a year ago. The company had recorded net profit of CNY140m (US$22m) in the first half of 2010.
Anhui Conch rises 3.3% to HK$39.65 (US$5.10), and is now on 14.7X FY11 and 12.4X FY12 consensus earnings, less attractive after the stock’s 65% rally YtD, but valuation nonetheless remains undemanding, especially considering likely upward earnings revision ahead. CNBM is up 3.2% at HK$16.78; Asia Cement is up 9.9% at HK$7.02.