China’s second-largest cement producer by capacity, Anhui Conch Cement, reported a decline in first-quarter net profit but an improved pricing environment has begun to emerge in the company’s key regional markets.

Conch said its net profit attributable to shareholders for the first three months of 2013 declined 22.18 per cent YoY to CNY972m.

Operating revenue was CNY9.91bn, an increase of 11.8 per cent from a year earlier.

On its outlook, Morgan Stanley said: "we still like Conch's exposure to Eastern China, given capacity addition in the region and demand acceleration as per our latest channel checks with downstream concrete mixers."

Meanwhile, Bank of America Merrill Lynch has raised its target price for Anhui Conch to HK$31 from HK28.4. It said cement prices in the east and central markets, which account for 57 per cent of Conch’s total capacity, have increased strongly since mid-March and the cement/clinker price has now reached or even exceeded peak levels seen in 4Q12. The research house expects prices to further rise by CNY20-30/t before the end of June, when demand should soften to some extent. It does not expect prices to soften in the third quarter due to the healthy demand/supply situation and producers’ supply discipline.