2Q16F earnings to be better than expected
​ We held a neutral view previously as we expected the cement sector to transition with lackluster demand. However, the recent trend turns us positive on TCC given 1) better than expected 2Q16F earnings and; 2) 2H16F earnings YoY to turn positive. TCC is trading at 1.0-1.1x 2016F P/B with ROE of 4-5%, lower than the historical avg. of 1.4x in 2009-15 (vs. historical avg. ROE of 4%). We expect its share price to rebound and set target multiple at 1.2x 2016F P/B (vs. 1x previously).
Taiwan Cement is engaged in the production and sale of cements, premixing concrete, lime, clay and cement products such as cement block, concrete pipe, asbestos board, asbestos tube and asbestos tiles; earth and stone excavation industry; operation of cement related industries, steel and iron smelting industries and nonmetallic mining industries; thermal power generation; power and natural gas supply; provision of railway, marine and mechanical transportation services; reprocessing, manufacture, and sales of building, and interior decoration materials.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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