Daiwa Says China National Building Material’s A-Share Issue Plan Positive
Daiwa says concerns about the balance sheet, EPS dilution from China National Building Material’s (Hong Kong staock code 3323) potential A-share listing and continual decline of cement prices in East China have been weighing on CNBM’s share price, but it believes the A-share listing “should be seen positively” as it will significantly strengthen CNBM’s balance sheet; it notes a consistent criticism by investors is that while CNBM’s gearing has been coming down, it remains high at over 200% net debt-to-equity at end of 2011. “We expect the benefits from A-share listing to outweigh the potential EPS dilution,” Daiwa says and keeps CNBM at Buy with a target price of HK$12.40. CNBM is down 1.8% at HK$10.00 on profit-taking after its 8.6% jump Wednesday.
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Nomura said its previous estimates for container -shipping losses in 2011 looking too optimistic, and a disappointing 3Q peak season driving the likelihood of 2H losses exceeding 1H losses. The research house now forecasts the slump to continue into 2012 – effectively two consecutive years of losses. The drag on container box production should send box prices lower; hence, it downgraded the box sector. For container shipping, Nomura remains bearish. It noted that the sector remains under pressure from a greater focus on marketshare and utilisation-driven strategies than on earnings, weak global economies, and capacity pressure on long-haul routes