HSBC cuts target price for China Shanshui Cement

HSBC Research cut its target price for China Shanshui Cement to HK$3 from HK$4.2, and downgraded the stock from "overweight" to "underweight".

The research house thinks expectations for better pricing in 2H (during the peak season)  will disappoint given Shanshui's geographical exposure.

Furthermore, HSBC forecast earnings to remain depressed in FY2014 due to persistently high tax expenses resulting from Shanshui's use of high-yield corporate bonds for offshore financing, as well as increased finance costs as a result of the company's breach of its 3.5x total debt/EBITDA trigger ratio.