1QFY22 earnings decline worse than expected (NEGATIVE)
<Earnings First Take> CRC 1QFY22 earnings decline worse than expected (NEGATIVE)
- CR Cement’s revenue dropped 18% y-o-y to HK$6,976m on lower sales volume. Sales volume dropped 33% y-o-y due to Covid.
- Net earnings declined 43% y-o-y to HK$729m due to lower unit GP achieved due to rising input cost. Unit cement GP lowered to HK$103 per tonne (1QFY21: HK$107 per tonne).
- As of end-March, gross debt increased 30% from end-Dec; net debt to equity level slightly increased to 7% from 2%.
- Guangdong has not followed to the recent price hike in Guangxi because of new supply. The latest company sales and silo level was still weaker than last year for April.
- We expect infrastructure project would start support cement consumption rebound end of 2Q. According to last downcycle it may represent a PB valuation of 0.7x.
- Thus, we have FULLY VALUED rating on the counter and TP of HK$6.0.