West China Cement: Much Ado About Nothing

研报英文原文证据摘录

West China Cement: Much Ado About Nothing

moved from JACI? Weschi had Rmb8.6bn of non-current assets

in China in 2025, but there is no detailed disclosure by province. Taking its China

capacity breakdown (Central Shaanxi, Southern Shaanxi, Guizhou and Sichuan

represent 52%/34%/7%/6% of total China capacity) as a reference, we estimate an

asset value of Rmb4.5bn/2.9bn/0.6bn/0.5bn for the four markets, respectively (Table

3). If Weschi sells Guizhou and Sichuan assets, we estimate that China’s asset share

would decrease from 32% to 29%, but it would remain the largest country, followed

by Congo (21%). However, if it sells Guizhou, Sichuan and 100% of Central Shaanxi

capacity, China’s share would drop to 14% and rank below Congo (25%)/Ethiopia

(19%). This would trigger a change in COR and removal from JACI. Our initial

calculations suggest that in addition to Guizhou and Sichuan, Weschi can only sell at

most 40% of the Central Shaanxi assets for it to retain China as the largest country

by assets and hence remain in JACI (Table 4).

• JACI exclusion, if any, is not an imminent risk: J.P. Morgan index rules would

require a review of Weschi’s asset mix change for four consecutive quarters after any

asset disposal, and the index team would decide its COR in the following annual

review (Q2). This implies that even in the worst case in which Weschi sells the

majority of its China assets and loses China as COR, JACI exclusion would be

a 2028 event and is not an imminent risk.

• Takeaways from management meeting in Xi’an: (1) Uganda ramp-up is slower

than expected and 2026 sales target is lowered from 2mn tons to 1.7mn-1.8mn tons.

(2) Ethiopia ASP has risen to US$80/ton (Rmb545) with a margin of Rmb200/ton as

Weschi passes on higher energy costs to customers.