Anhui Conch Cement’s Weak Q1 Results Largely Expected; Shares Undervalued; Awaiting Catalysts

Anhui Conch Cement’s first-quarter 2022 net profit was down 15% year on year to CNY 4.9 billion, accounting for 15% of our full-year forecast. We view the results as largely in line, given that the first quarter is seasonally a weak quarter. We think the poor performance was already expected by the market, taking into account COVID-19 lockdown measures in China. We keep our fair value estimate of HKD 70 (CNY 59) unchanged. We think Conch is currently undervalued but near-term uncertainty from COVID-19 will continue to pressure share prices.