Anhui Conch Cement Earnings: Largely In Line but Slow Recovery Expected; Shares Attractive

Stripping out impairment of about CNY 334 million, narrow-moat Anhui Conch Cement’s 32.6% year-on-year decline in 2023 net profit is largely within our expectation. This is primarily driven by lower selling prices and falling cement demand amid the lackluster real estate market. We keep our fair value estimate of HKD 29.00 per H-share (CNY 26.50 per A-share). With H-shares trading at 0.4 times 2024 price/book and an estimated yield of more than 5%, we think the shares are attractive for long-term investors. We believe share price performance will be driven by signs of a price recovery in China’s housing market, and we expect China’s real estate market will gradually recover through 2026.