Anhui Conch (914 HK/600585 CH) reported a 76.8% YoY rise in revenue to RMB32.0b and a 147.0% increase in net profit to RMB7.7b in 3Q18, bringing 9M18 net profit to RMB20.6b which was better than ours but within the street’s expectations. Results were boosted by non-operating income and interest income.

The H-share is down about 23% from its peak around end Jul this year, while the A-share is down about 18%. This compares to the HSI’s 12% drop and SHCOMP’s 9.6% fall over the same period.

Given how cement prices have risen, there have been concerns about the possibility of the Chinese government imposing price caps, which may have contributed to weakness in its share price. Concerns over a property slowdown could have also weighed on cement stocks.

Pending more details, we maintain our HOLD rating on the stock but put our fair value estimates of HK$49.72 (H-share) and RMB36.75 (A-share) under review.

Source: OCBC Research - 25 Oct 2018