CICC Research raised its target price for Anhui Conch (00914) by 6.7% to HK$24, and maintained its "buy" rating.
The research house said Conch's 1Q net profit of Rmb1.155bn is largely in line. CICC estimate sales of cement and clinker rose 10% in 1Q to 55.5mn tonnes, faster than 1Q 2015's 5%. Operating cash flow rose by Rmb880mn YoY to Rmb1.73bn thanks to falling inventory.
It noted that cement prices in eastern China have risen 12% in 2Q, which will drive up GP/t. CICC expects sales volume to rise 10% in 2Q. The research house lifted its 2016 and 2017 earnings by 39.3% & 31.5% to Rmb8.15bn and Rmb8.38bn.
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