Jefferies Research lowered its target price for BBMG (02009) to HK$6.2 from HK$7, and maintained its "buy" rating due to potential upside from the A-H share connect.
The research house said Hebei's (one of BBMG's core markets) mini-stimulus announced in June did not lift the region's cement market. 3Q NPAT declined 17% yoy as both cement and property sales fell.
Jefferies cut its 2014 and 2015 EPS by 4% and 7%.
It said that 43% of BBMG's shares are listed in Shanghai and just 27% in HK. A-shares are now trading at RMB7.15/share, about 70% premium versus H-shares. Once the A-H connect is implemented, it should narrow the gap and spark a re-rating of H-shares, which are currently trading at a depressed valuation of 0.6x 1-year forward PB.
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