Credit Suisse Lowers Target Price of Conch Cement (0914.HK) to HK $105

< P > Recommended stock: Credit Suisse lowered the target price of Conch Cement (0914.HK) from HK $110 to HK $105 due to the risk of cement price and production growth.

< P > Credit Suisse said that a 20% increase in capital expenditure in FY08 compared with 2007 meant that cement clinker increased by 20-30 million tons in 2009, compared with a previous expectation of an increase of 10 million tons; it said that the rise in coal prices was still worth focusing on. Credit Suisse added that higher energy costs would be offset by higher cement prices and internal cost savings. The price outlook is expected to be poor, with the average selling price rising by 5%; Conch Cement will achieve earnings per share of RMB 1.9/share in 2008 and RMB 2.5/share in 2009, with a valuation of HK $40/share (8 times of enterprise value/earnings before interest, tax, depreciation and amortization) and HK $55/share (11 times of enterprise value/earnings before interest, tax, depreciation and amortization). Maintained its outperform rating on the stock; last down 3.6% to HK $51.50.

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