Cloudy with a chance of western projects
Short-term sales momentum expected to remain subdued. Considering the slow investment growth amid the COVID outbreaks during the first five months of the year, our previous sales assumptions were overly optimistic, and we believe there will be a downward revision in consensus estimates during the interim reporting period.
Shaanxi cement expected to be underpriced in the near term. Amid weaker-than-expected downstream market demand, Shaanxi cement prices have been under pressure since 2Q. This has led us to revise our unit GP estimate for the company, down to the Rmb90-95 per tonne level for the next two years.
Strategic shareholder continues to raise stake. China cement industry leader Anhui Conch continues to raise its stake in the company and is now the second largest shareholder. In view of the improving construction market outlook, we believe WCC would benefit from developments and projects in the western part of China.