Furui released a research report stating that they have raised the target prices of Chinese cement stocks, with the target price of Conch Cement (00914) increasing from 15 Hong Kong dollars to 30 Hong Kong dollars, and the target price of CR Cement (01313) increasing from 0.94 Hong Kong dollars to 2.47 Hong Kong dollars, both stocks are upgraded to a 'buy' rating. They have also raised the target price of CNBM (03323) from 4.01 Hong Kong dollars to 6.04 Hong Kong dollars, maintaining a 'buy' rating.
The bank pointed out that the surprise stimulus measures announced by the mainland at the end of last month. The bank believes that this round of quantitative easing is sustainable and will help reverse demand. Most commodities had good destocking conditions before the peak season, and it is anticipated that the demand in the fourth quarter will improve year-on-year as the base in the fourth quarter is low, for example, cement. The bank is most bullish on cement in the fourth quarter, as more convincing evidence indicates that supply constraints will lead to more sustainable price increases. Under the stimulus plan, the bank feels positive about all commodities in the fourth quarter, with a preference in the order of cement, aluminum, copper, iron, and lastly coal.
