Table of contents
Our sector view remains positive ..................................................................................................... 6
Demand: a long way from peaking ............................................................................................... 6
Supply: capacity growth is falling ................................................................................................. 9
Prices and profit margins: recovery is more than a wish ........................................................... 10
Revisions to our earnings forecasts ................................................................................................ 11
Earnings revisions for 2012-13 .................................................................................................... 11
Growth beyond 2014: domestic acquisitions, downstream expansion, overseas expansion .... 13
Positive free cash flow, reduced gearing levels .............................................................................. 14
Free cash flow should turnaround ............................................................................................. 14
Gearing down balance sheets ..................................................................................................... 14
Risks of equity financing ............................................................................................................ 14
Valuations and changes in our investment ideas .......................................................................... 15
Are the stocks really that attractive? Yes, in both PER and EV/t terms . . . .............................. 15
... also in PBR terms .................................................................................................................... 15
Target price revisions and ratings ............................................................................................... 17
Major catalysts and risks ................................................................................................................ 18
Positive catalysts in the near term.............................................................................................. 18
What are the risks for investors? ................................................................................................ 18
Company Section
China Resources Cement Holdings ............................................................................................ 20
China Shanshui Cement Group .................................................................................................. 28
China National Building Material .............................................................................................. 36
West China Cement .................................................................................................................... 44
Anhui Conch Cement .................................................................................................................. 52
China National Materials ............................................................................................................ 60