Changes in Hong Kong stocks | China Building Materials (03323) fell more than 4% in early trading, coal prices rose, squeezed cement profits, UBS said the cement business dragged down the company's profits

The Zhitong Finance App learned that China Building Materials (03323) fell more than 4% in early trading. As of press release, it decreased by 3.46% to HK$3.065, with a turnover of HK$18.794 million.

According to the news, cement prices have recently risen sharply in many places, and cement prices across the country have continued to rise. The analysis points out that this round of price increases were not driven by demand, but rather passive transmission of a sharp rise in upstream coal prices. There was no substantial improvement in industry efficiency, and there was limited room for downstream profit recovery. According to reports, coal accounts for about 50% of the biggest cost on the cement production side.

UBS released a research report saying that China's building materials and cement business is expected to still record losses this year, dragging down the company's overall profit. The cement cycle is still being hit by rising costs and weak demand. Since the beginning of the year, the average price of the 5,500 thermal coal in Qinhuangdao has risen 20% year on year. Affected by the situation in the Middle East and the tightening of domestic supply after the coal mine security inspection in Shanxi, cement production costs have increased by about 20 yuan per ton. At the same time, demand for real estate and infrastructure continues to weaken, making it difficult for producers to pass on costs. The bank reduced the target price from 7.64 yuan to 7 yuan, and the profit forecast for this year and next two years was reduced by 95% and 30%, respectively.