Anhui Conch Cement - A "Bottoming but still struggling" (Neutral) Ding

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Anhui Conch Cement - A "Bottoming but still struggling" (Neutral) Ding

1.2x

becoming a meaningful outlet for excess supply, supporting utilization on China's cost

EPS (UBS, diluted) (Rmb)

advantage and robust Asian and African demand. We estimate exports will rise from

From To % ch Cons.

0.5% of total supply in 2025 to 4% in 2027E, aiding industry rebalancing. On supply, we 12/26E 1.59 1.34 -16 1.64

forecast net clinker capacity reductions of 40mt/50mt in 26/27E, supported by ongoing 12/27E 1.49 1.41 -5 1.82

replacement and market-driven rationalization through bankruptcies and M&A activity. 12/28E 1.43 1.56 9 2.07

Coal cost normalization supports earnings recovery Sharon Ding

Analyst

We lower our 26/27E PO-42.5 cement ASP forecasts to Rmb345/t (from Rmb360/t/ sharon.ding@ubs.com

Rmb367/t previously) to reflect sustained low-price competition. However, we expect +852-2971 6284

thermal coal prices to decline from Rmb750/t in 26E to Rmb720/t in 27E, driven by

Elvis Liueasing energy crisis and slower growth in thermal power demand (+4%/+1% in 26/27E)

Associate Analyst

amid accelerating renewable substitution. Lower fuel costs should contribute ~Rmb2/t elvis.liu@ubs.com

of incremental profit and support a gradual margin recovery from trough levels. +852-3712 3052

Valuation: PT raised to HK$18.2/Rmb18.9; Upgrade Conch-H to Neutral

Conch maintains a ~Rmb50/t Gp/t premium over the industry and should remain

profitable even as industry earnings hover around breakeven, with market share gains

continuing throughout 1H26. We cut our 26/27E earnings by 16%/5% to Rmb7.1bn/

Rmb7.5bn. Conch H/A currently trades at 10x/12x forward P/E (5y avg), 0.4x/0.5x P/B

(1std below 5y avg), and offers a 5.3%/4.4% dividend yield (5y avg). Maintaining our