Morgan Stanley sees China recovery from 4Q12

Morgan Stanley (MS) believes that the China cement industry showed some early signs for recovery, noting that prices have stopped declining on rising property construction following accelerating land sales. In addition,  land sale revenue can help governments on construction capital. Therefore, MS believes that cement demand has turned steady, and a recovery can be expected in 4Q12 - 2013.

The Bank added that with the slump in earnings, the cement manufacturers reduced capital expenditure, the orders of Sinoma fell 30 per cent, and it is estimated that the net supply growth will slow from eight per cent in 2012 to one per cent in 2013

Morgan Stanley said it prefers regions with lowest cement prices and slower supply growth in 2013. Northern and Eastern China fall into the choices, and the producers exposed are BBMG, Anhui Conch and CNBM. Due to the above reasons, the Bank lifted its views towards the cement industry and raised the rating of CNBM and Anhui Conch to Overweight. (Source: AAStocks Financial News)