Morgan Stanley released a research report stating that Conch Cement (00914) saw a 40% year-on-year drop in net profit to 5.2 billion yuan (same below) for the first nine months, with a third-quarter net profit of 1.87 billion yuan, slightly lower than the bank's expectations. The bank rated the company as "shareholding" with an H-share target price of 21.9 Hong Kong dollars.
The bank estimates that the self-produced clinker and cement shipments in the third quarter of 2023 are around 6.9 million tons, a 6.2% year-on-year decrease, a 1.67% quarterly decrease, slightly widening from the 3.1% decline in the first half of this year, possibly due to industry production adjustments caused by weak demand. The average selling price in the third quarter of this year is expected to be around 235 yuan per ton, flat on a quarterly basis, but down 5.3% year-on-year, roughly in line with market price changes in the eastern part of the mainland during the period. Due to lower production costs, the estimated gross profit per ton in the third quarter is about 57 yuan, a slight change from 52 yuan in the preceding quarter and 60 yuan in the same period last year.
