Equity Analysis /
China

CN : BBMG-A - Earnings impact to be largely neutral for the proposed restructuring of the cement business

    CGS-CIMB
    1 April 2021
    Published byCGS-CIMB

    BBMG announced a restructuring of its cement business after market close on 31 Mar. The corporate structure will be streamlined, and the cement business will be wholly owned by its subsidiary Jidong Cement (000401.CH; NR). Our rough estimate shows that the earnings change for BBMG will be small. It remains to be seen whether the restructuring will trigger a switch from BBMG to Jidong Cement, as the latter will become a sizable pure cement play, while some investors may not like BBMG’s conglomerate structure. We maintain our HOLD rating. The low visibility of the property development business may continue to cap the upside.