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Investing.com - Goldman Sachs downgraded West China Cement Ltd. (HK:2233) (OTC:WCHNF) from Neutral to Sell on Thursday, while raising its price target to HK$1.40 from HK$1.30.
The investment bank revised its recurring earnings estimates for West China Cement, projecting a 4% increase for 2025, an 18% decrease for 2026, and a 1% increase for 2027. These adjustments primarily reflect lower unit cement gross profit expectations in both domestic and African operations, along with project delays.
Goldman Sachs expects domestic cement margins to remain depressed in the near term due to weak demand and limited supply adjustments. The firm notes that industry controls on unauthorized capacity should show improved execution in 2026, following a grace period in 2025, supported by recent industry guidelines and local government policies.
West China Cement’s overseas profit is forecast to grow at a 47% compound annual growth rate from 2025 to 2028, though this projection is lower than Goldman Sachs’ previous estimate due to project delays and softening margin trends.
The investment bank cited challenging operating conditions and currency risks as factors creating significant uncertainties for the company’s African operations, concerns it believes are not yet reflected in the current stock valuation.
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