According to the latest statistics from the Digital Cement Network, the cement market price in mainland China fell slightly by 0.1% month-on-month, falling for eight consecutive weeks, putting pressure on cement stocks yesterday. Not to mention, the China Building Materials Federation issued the “2019 Industrial Plan for Air Pollution Prevention and Control in the Cement Industry” to reduce pressure in the cement industry and reduce the production capacity of clinker materials by 70 million tons (eliminating backward production capacity). Furthermore, the mainland has promoted the implementation of infrastructure, which has also led to an increase in demand for cement.

Asia Cement (00743) products are mainly sold in Southeast, Central and Southwest China. The group announced earlier that by the end to the middle of June this year, the profit attributable to equity holders will increase by about 50% to 60% year-on-year. The Group's mid-term results for this year will be announced on August 7, which is worth keeping an eye out.

In 2018, the Group's net profit surged 3.02 times year-on-year, and its performance continued to perform well in the first quarter of this year: cement and clinker sales were 6.31 million tons, an increase of 8.4% year-on-year; it is also estimated that in the first half of this year, sales of cement and clinker will reach 15 million tons, an increase of 3% year-on-year.

The current interest rate is about 7.8%, which is quite attractive. In terms of valuation, the historical price-earnings ratio and the predicted price-earnings ratio were 6.6 times and 5.4 times, which is underestimated. In terms of trend, an upward trajectory was formed from the end of May. On July 16, the high price of 14.04 yuan was blocked and retreated, falling back below the %D line for 10 days, 20 days, and 50 days. The random slow step index (STC) %K line continued to fall below the %D line, and the index's smooth moving average (MACD) maintained a bear gap. It is expected that it will be absorbed by a low of 10.8 yuan, rebound resistance of 14.04 yuan, and continued to hold without falling below 9.5 yuan.