Nomura cuts China Resources Cement to "reduce"

Nomura cuts China Resources Cement to "reduce"
Published: 22 January 2013


Investment bank Nomura has downgraded China Resources Cement (CRC) from "buy" to "reduce" and cut its target price to HK$4 from HK$8.30.

The research house sees a further downside to average selling prices (ASP) in CRC's key areas including Guangdong, Shanxi and Yunnan provinces. It also noted excessive new adds in capacity in Guangdong and Shanxi provinces for 2013.

Nomura expects South China's ASP to drop at least CNY30/t (US$4.8) in 2013 from current levels to reach the equilibrium of supply and demand in response to another 14Mta of clinker capacity to be put into operation for 2013.

It forecast CRC to record a 13 per cent YoY drop in earnings per share for 2013, due to lower cement ASP and gross profit per tonne.