Downgrade to Sell: West China Cement Faces Margin Pressure and Uncertain Profit Outlook

West China Cement, the Basic Materials sector company, was revisited by a Wall Street analyst today. Analyst Trina Chen from Goldman Sachs downgraded the rating on the stock to a Sell and gave it a HK$1.40 price target.

Trina Chen’s rating is based on several factors impacting West China Cement’s performance. Despite the company’s earnings for the first half of 2025 exceeding expectations due to lower selling, general, and administrative expenses, the domestic cement margins remain under pressure. This is attributed to weak demand and limited supply work, which continue to affect profitability.
Furthermore, while there is potential for improvement in controlling unauthorized capacity, the benefits for West China Cement are expected to be less significant compared to other regions. Additionally, the company’s overseas profit growth forecast has been reduced due to project delays and declining margin trends. The challenging operating environment and currency risks further contribute to the uncertain profit outlook for its operations in Africa, leading to the downgrade from Neutral to Sell.