Conch's 1Q15 earnings fall 31%

Anhui Conch reported 1Q15 net profit of CNY1.7bn (US$274m), down 31 per cent YoY. Sales declined 11 per cent YoY driven by almost a 20 per cent decline in average selling prices.

Due to the weak seasonal recovery in cement price, Jefferies expect 2Q15 earnings could decline 30 per cent year-on-year as well. "Seasonal recovery in cement price has been happening slower than expected due to weak demand growth. Cement price continues to fall well into April and is now 10-25 per cent lower than last year in most parts of China," it said in a research note.

While a lower thermal coal cost could help (average thermal coal price is CNY100/t lower than last year), Jefferies still expect a significant GP/ton decline from CNY91/t last year to CNY64/t in 2Q15. That would result in another 30 per cent decline in earnings.