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【出版时间及名称】：2010年3月台湾水泥行业研究报告
【作者】：汇丰银行
【文件格式】：pdf
【页数】：31
【目录或简介】：
Recent visit confirmed our cautious
view on margins and earnings growth
Demand recovering, but ASPs weak on
low utilisation; margins squeezed by
soaring coal costs
Downgrade TC to UW(V) from N(V); stay
UW on AC (remove V-flag)
Share price downtrend to continue. Taiwan cement stocks
have underperformed the market by more than 50% over the
past year, and we expect this trend to continue, given margin
pressure and falling contributions from non-cement operations.
We forecast a 10.9% decline in earnings for Taiwan Cement
(TC) in 2010 and growth of 1.8% for Asia Cement (AC).
Cost pass-through is only partial. Despite the recovery in
demand for cement, we are cautious on the ASP outlook, as
overall utilisation remains low (at 59%) and competition from
lower-price imports has intensified. We think the 4% and
16% coal cost increases foreseen by TC and AC for 2010 are
unlikely to be passed through entirely, squeezing margins.
Falling contribution from non-cement business. We expect
earnings for HoPing Power, TC’s major contributor, to decline
64% in 2010, after a one-off gain last year, due to a mismatch
between coal cost and electricity tariffs. AC’s dry bulk shipping
segment has not bottomed out yet, and we estimate that its
contribution will drop 8% in 2010 on a combination of low
freight prices and strong fleet growth.
Valuations not justified. TC and AC trade at 2010e PEs of
16.1x and 11.7x, respectively, and PBs of 1.3x and 1.4x, above
the international averages of 13.2x and 0.9x; but they offer the
lowest growth on comparable ROEs. Despite recent share price
weakness, the stocks still trade close to their mid-cycle PEs –
this is unjustified, in our view, as we expect no improvement
in margins or growth in the near term. We downgrade TC to
UW(V) from N(V) and remain UW on AC, but remove the
volatility flag, as the shares are no longer considered volatile.
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