BlackRock positive on China industrial capacity reduction

By Clement Tan

HONG KONG, March 28 (Reuters) – China industrial stocks offer good, but selective, investment opportunities as steel mills to cement producers consolidate to reduce overcapacity, according to a fund manager at BlackRock.

“We are not bullish, but … taking somewhat of a contrarian view for industrial sectors because we see the inflection point in terms of demand and supply balance,” Jing Ning, director and portfolio manager of BlackRock’s $1.4 billion China Fund, told reporters on Wednesday.

She declined to give specific company names, but said firms with good balance sheets and a track record of controlling costs would benefit the most.

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CNBM shares fall over fears for aquisition strategy

By Clement Tan

HONG KONG, March 25 (Reuters) – China National Building Material Co Ltd’s shares fell on Monday after the company’s 2012 net core profit revealed the extent of its reliance on subsidies, raising fears that its aggressive acquisition strategy could prove unsustainable.

Declining demand has spurred consolidation in the Chinese cement sector, led by larger sector players such as CNBM. Three of its subsidiaries acquired 24 cement companies in 2012, according to the company’s 2012 earnings statement.

CNBM shares in Hong Kong were down 6.2 percent at 0400 GMT, nearing its December lows, even after the company reported a 30 percent decline in 2012 net profit on Friday which was better than some analysts had expected.

In contrast, Anhui Conch Cement Co Ltd rose 0.8 percent after posting a 45 percent decline in 2012 net profit, spurred by core net profit, which excluded subsidies, that was 14 times more than CNBM’s 2 yuan per ton, according to Nomura.

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