UOB Kay Hian raised its target price for BBMG Corporation (02009) to HK$8.84 from HK$8.16 to factor better earnings growth in the cement segment, and maintained its "buy" rating.
The research house said the latest cement price hike of Rmb50/tonne should substantially lift BBMG's GP/tonne or restore it to a level similar to that in 2014. UOBKH lifted its earnings forecast by 10-22% in 2016-17.
Meanwhile, it noted that the better cement price outlook should ease the market's concern over an earnings dilution at BBMG post its potential merger with Jidong.
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