UBS: Lowers CNBM (03323) target price to HK$7, maintains "Buy" rating.

UBS released a research report stating that it has lowered CNBM's (03323) target price from HK$7.64 to HK$7, maintained its "Buy" rating, and cut its earnings forecasts for this year and next year by 95% and 30% respectively. The bank expects the company's cement business to remain loss-making this year, dragging down overall profitability. UBS pointed out that the cement cycle is still being hit by rising costs and weak demand. Year to date, the average price of Qinhuangdao 5,500 kcal thermal coal has risen 20% year-on-year. Affected by Middle East geopolitical disruptions and tightened domestic supply following safety inspections at Shanxi coal mines, cement production costs have increased by about RMB 20 per tonne. At the same time, demand from real estate and infrastructure remains persistently weak, making it difficult for producers to pass on costs. However, the bank noted that the new materials business is developing well and continues to be CNBM's main profit engine, helping to offset the cyclical weakness of traditional building materials.