Morgan Stanley raised its target price for China National Building Material from HK$19.8 to HK$24, and maintained its "overweight" rating.
It believes the power cuts in Anhui province and continued power restrictions in
neighboring provinces have resulted in reduced production in September and will help
accelerate the phase-out of energy inefficient plants.
Morgan also lowered its cost of equity assumption from 11.1% to 10.7%, to reflect its
stronger confidence in supply side restructuring. The house forecast production rates to remain low in 4Q, which is positive for pricing.
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