Improved outlook for Asia Cement Corp in 2013

Taiwanese producer Asia Cement Corp is expected to return to a path of growth this year driven in part by earnings growth from its operations on mainland China, a recent report by HSBC has said.

Last year, Asia Cement’s net profit plunged 38 per cent to TWD6.24bn (US$208.3m), which was 16 per cent lower than HSBC’s forecast. However, the Taipei Times reports that HSBC analyst Elaine Lam retained her “neutral” rating on Asia Cement, with an unchanged 12-month target price of NT$36.45, representing that the stock will be traded at 1.5 times its earnings per share.

Asia Cement is expected to make NT$2.42 per share in earnings this year, a 25 percent jump from last year’s NT$1.93 a share.

“Merger and acquisition activity led to faster-than-expected consolidation in southwest China, leading to a higher-than-expected average selling price for its [Asia Cement’s] Chengdu operation,” Lam said in the report.

Lam said she noticed that earnings from Asia Cement’s Chinese cement operation rebounded strongly in the fourth quarter last year, thanks to the average selling price normalising in September.

Asia Cement forecast that its production in China will increase 27.2 per cent this year to 28Mta from 22Mta last year, according to a financial statement posted on the company’s website.

Lam also expects a stronger-than-expected non-cement contribution this year.