CNBM issues 9M15 profit warning

China National Building Materials (CNBM) warned investors that its nine-month profit will likely plunge 80 per cent from a year earlier, implying that 3Q15 slipped into losses. CNBM blamed weak cement prices driven by a slowdown in demand and severe industry overcapacity.

Barclays notes the profit alert points to a loss of CNY0.02 per share in the third quarter. It said that the profit warning is disappointing as it indicates cement prices in 3Q15 were weaker than expected by market.

The house also notes that the profit warning also questions CNBM's plan to raise its stake in Shanshui Cement, which have faced the biggest price falls compared with other provinces so far this year. "Its intention of buying more shares in Shanshui Cement could increase finance costs, if it happens," Barclays says.