Citi cuts Asia Cement China to sell

Citi cuts Asia Cement China to sell
27 October 2011

Citigroup downgrades Asia Cement China to Sell from Buy after changing its valuation methodology to EV/ton from P/E. The house cuts its target price to HK$2.96 from HK$7.99, despite raising FY11-12 net profit forecasts by 27% and 7% respectively on stronger-than-expected prices.

 "We forecast margin to stabilise as its major markets have well balanced demand/supply. However, we think investors would shift their focus from profit to asset, in a risk reverse environment," the house said.

It expects the company to show almost zero volume growth in FY12. "In a market with high risk-aversion, we prefer large cap names with strong balance sheets."
Published under Cement News