Title Asia Cement (1102 TT) Buy
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Title:Asia Cement (1102 TT) Buy
Download File:1102 TT Asia cement equity report summary--180920--sinopac.pdf 
Summary:Buy, TP of NT$48 (1.1x 2019F P/B): 1) ACC’s 2Q18 performance beat our expectation on strong seasonality and gains from investments, and its cement prices have remained high in 3Q18 even as sales volume receded due to seasonality; 2) We estimate sustained high cement prices, underpinned by China’s ongoing supply-side reforms and environmental protection measures, coupled with stabilizing coal prices will boost ACC’s gross profit/tonne of cement in 2018 and 2019; 3) We anticipate rising contribution in 2018 and 2019 from ACC China and from ACC’s investments in U-Ming and FENC; 4) Considering bullets 2 and 3, we estimate ACC’s earnings will reach a new high in 2018 and rise steadily in 2019, with GM and net profits both years exceeding the peaks seen in 2011 when the industry was in its prime. We thus see valuation upside from current 0.9x 2019F P/B.
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