Taiwan and Asia Cement are expecting to experience a profitable year, on the back of price hike in China and increasing pressure on cement manufacturers on the mainland who cannot meet Bejing's stricter environmental regulations.

Taiwan Cement Corp is forecast to generate net profit of TWD16.48bn (US$556.1m) for the whole of this year, a 117 per cent surge from TWD7.6bn last year, Taishin Securities Investment Advisory Co said.

Taiwan Cement's revenue is forecast to grow 21.6 per cent annually to TWD119.52bn from TWD98.31bn, following expected price hikes in the Chinese market.

Beijing's ongoing plan to transform its cement industry by imposing more stringent environmental standards and related taxes helped push China's benchmark cement price to CNY420.70/t (US$66.43/t) last quarter, up 6.5 per cent from the previous quarter, Taishin said.

Beijing's tightened measures could eliminate unqualified competitors that cannot meet standards, it said.
Taiwan Cement could also start to fully recognise the profits generated by its Chinese subsidiary, TCC International Holdings Ltd, Taishin added.

Taiwan Cement saw its net profit last quarter jump 164 per cent to TWD2.58bn from TWD832m on an annual basis, while sales rose 14.2 per cent to TWD24.18bn from TWD21.18bn.

"Gross profit per tonne of Asia Cement's China business reached a five-year high in the fourth quarter of last year, and that momentum is likely to expand further in the first half of this year," Yuanta analyst Leo Lee said.

Cement prices in China have returned to an upward trend after inventory digestion almost finished last month, Yuanta said.

The consultant forecast that Asia Cement's net profit could expand 53 per cent to TWD8.37bn this year from TWD5.47bn last year. Asia Cement has yet to release its earnings results from last quarter but reported that 1Q revenue expanded 32.37 per cent YoY to TWD16.57bn from TWD12.52bn during the period last year.