China National Building Materials said it expects 2011 annual net profit to double on increased prices and higher cement sales and, according to some analysts, the company should now reap the benefits of its aggressive expansion plan over the last two years.
CNBM said in a filing to the Hong Kong Stock Exchange that audited net profit for last year may increase by more than 100 per cent compared to 2010.
In a statement, the company said: “In the year of 2011, driven by continuous improvement in the supply and demand balance of the cement industry, the sales volume of the products of the Group’s cement segment increased continuously and the average selling prices of the products of the Group’s cement segment rose significantly compared with those of 2010. As such, it is expected that the audited profit attributable to equity holders of the Company for the year of 2011 may increase substantially from that of 2010.”
Nomura Investment Bank believes that now is the "payback period" for CNBM's aggressive expansion over last several years amid high capacity growth, diversified status and M&A potential. "CNBM should enjoy a competitive edge in M&A amid its rich experience and aggressive expansion via acquisition versus Anhui Conch which has in the past expanded by building new production lines,” the house said.
