Citigroup halved its target price for China Resources Cement (CRC) to HK$5.88 from HK$7.94, and downgraded the stock to "neutral" from "buy".
It believes CRC should deliver total sales of 66Mt in 2012, up by 31% from 51Mt in 2011.The company has the most certain volume growth in the cement universe, thanks to its strong pipeline.
Citi expects gross profit bottoming at around HK$90/t in 1Q 2012. Demand should recover in 2Q seasonally, and any relaxing signs on macro side by mid-year suggest a boost in demand in 2H.
Earlier, CRC had estimated that its cement output in 2012 and 2013 will reach 77.7Mt and 85MT respectively. The company forecasts a cement output of 68.7Mt this year, and the figure may be 90Mt if the output of its subsidiaries is taken into account.
