Anhui Conch forecasts benefit from shake-up of mainland cement sector

Hong Kong-listed Anhui Conch Cement, the mainland's biggest cement producer, expects to increase market share and lift profits as a result of Beijing's plan to consolidate the nation's fragmented cement industry.

In the next three to five years, the central government plans to pave the way for investment in more efficient cement manufacturing plants by closing obsolete plants currently producing 500 million tonnes of cement, which amounts to 28 per cent of last year's output of 1.8 billion tonnes.

'This will give big cement companies like ours room for large expansion. It will be very beneficial for the growth of big cement companies,' said Zhang Mingjing, the vice-general manager at Conch.

Investors appeared to endorse that expectation, and the company's shares ended the week up 65 HK cents at HK$55.65, a fresh three-month high. However they were still short of the 12-month high of HK$60.50 reached in September last year.

The firm will expand cement production capacity 25 per cent to 133 million tonnes this year from 106 million tonnes last year. Capital spending will rise to 10 billion yuan (HK$11.36 billion) from 8 billion yuan last year.

Conch had no firm acquisition plans in the near future, Zhang said, but he did not rule them out.