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Cement(000935):Raising prices for higher coal costs

发布时间:2010-04-27    研究机构:联昌国际证券

Cement price hike on 1May。

Maintain NEUTRAL. According to Business Times, Tasek will be raising cement priceby 10% on 1May to compensate for higher coal costs. This news is a surprise as wedid not expect cement prices to be increased, at least not until demand conditionsimprove. Although price hikes are usually viewed as positive for the sector, we areneutral on the price increase as we are cautious about the impact on cement playersgiven that demand is still weak, leading to high rebates, especially during 1Q10. Butnewsflow on pump-priming is buoying cement manufacturers’ hope that demand willpick up about 5% this year, led by stronger growth in 2H. Given the absence of strongcatalysts for the sector, we maintain our NEUTRAL call. For exposure to pumppriming,we prefer a direct exposure to the contractors.The news。

Raising retail price by 10%. Last week, Tasek announced that effective 1May, it willincrease its cement prices due to the ongoing rise in coal and other costs. The price ofbagged cement is due to rise 10% to RM15.50-RM16.50per bag (Figure 1).Bulk prices up by RM25/tonne. Over the weekend, Business Times reported theprice increase and quoted the Master Builders Association of Malaysia (MBAM) assaying that the cement manufacturers had wanted to raise prices for the past year. Italso stated that bulk cement is expected to go up by RM25per tonne from 1May.Regarding the impact on builders, MBAM said that contactors need to control theircosts. If cement prices are cheaper regionally, then they are likely to import.

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