China National Building Material Shares Drop After Weak 2022 Results
By Yi Wei Wong
China National Building Material Co. shares fell sharply Monday morning after the company reported weak 2022 earnings due to shrinking cement demand, supply shocks and a bleak economic outlook.
The building-material supplier's shares slid as much as 10.5% to 6.20 Hong Kong dollars ($0.79) in early trade, in its first trading session after reporting earnings on Friday.
CNBM said Friday that 2022 net profit fell to 7.96 billion yuan ($1.16 billion), compared with CNY16.30 billion a year earlier.
Cement production dropped 10.5% to hit a decade-low of 2.13 billion metric tons in 2022 amid headwinds pressuring China's real-estate market, CNBM said.
Following the results, a team of Citi analysts led by Jack Shang cut their target price on CNBM's shares to HK$11.10 from HK$12.60, and lowered their 2023 earnings estimates by 32% to factor in weaker sales volumes.
Despite the weak earnings, Citi maintained a buy rating on CNBM as the analysts think the worst may be over for the company.
"Management remains cautiously optimistic about 2023 demand, which is expected to be better year-on-year," Citi said. It projects CNBM's first-quarter earnings to be the weakest of the last 10 to 15 years, but for the company's earnings to pick up in the second quarter.
Write to Yi Wei Wong at yiwei.wong@wsj.com
(END) Dow Jones Newswires
March 26, 2023 22:35 ET (02:35 GMT)
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