Summary of China Basic Materials Monitor - October 2025 Industry Overview - The report focuses on the **China Basic Materials** industry, particularly construction materials, steel, coal, cement, aluminum, copper, and lithium sectors. Key Points Construction and Demand Trends - End-user orderbooks showed a month-over-month (MoM) increase as of mid-October, aligning with seasonal trends. However, infrastructure construction is deteriorating faster than anticipated, with weakened project start rates. The impact of central government special funding remains unclear based on feedback from construction dealers and producers of cement and construction steel [1][2][3] - Current Chinese demand for cement and construction steel is reported to be **11-18% lower year-over-year (YoY)**, while demand for copper and aluminum is **5-6% lower YoY**. Flat steel demand has increased by **2% YoY** [2][3] Supply Side Dynamics - There have been no significant cuts in steel production, while corrections in excess production and safety inspections in coal continue. Domestic disruptions in copper scrap have deepened [2] - Recent weeks have seen improvements in margins/pricing for coal, cement, aluminum, copper, and lithium, while steel prices have softened [2] Producer Feedback and Order Trends - A proprietary survey indicates that **61%** of respondents in downstream sectors and **26%** in basic materials reported an MoM increase in orderbooks for October. Conversely, **26%** of respondents indicated a lower MoM trend [3] Price and Margin Analysis - Margin improvements have been noted across several materials, including coal, cement, aluminum, copper, and lithium, while steel margins have softened [2] Market Sentiment - The overall sentiment in the basic materials sector reflects a cautious outlook due to the declining trends in construction and infrastructure projects, despite some positive signals in specific sectors like auto/EV and battery production [1][2] Additional Insights - The report highlights the importance of monitoring the impact of government funding on infrastructure projects, as its effects are yet to be fully realized [1] - The data suggests a potential shift in investment focus towards sectors showing resilience, such as auto/EV and battery production, while traditional construction materials may face ongoing challenges [1][2] This summary encapsulates the critical insights from the October 2025 report on the China Basic Materials industry, emphasizing the current demand trends, supply dynamics, and market sentiment.

Core Points - Cementos Pacasmayo S.A.A. announced a cash dividend of S/ 0.41 per common and investment share [1] - The total dividend amounts to S/ 190,300,410.65, which is related to retained earnings as of December 31, 2014, and results from 2015 to 2024 [1] - The dividend approval was made by the Company's Board of Directors during a session held on October 21, 2025 [1]

Market Overview - The Nifty index maintains a positive tone with targets set at 26,000 and new lifetime highs anticipated, although traders are advised to focus on index heavyweights and larger midcaps due to broader market underperformance [1] Company Earnings - Reliance Industries (RIL) reported a 10% growth in consolidated Q2 net profit at Rs 18,165 crore compared to Rs 16,563 crore in the previous year, with revenue from operations at Rs 2.59 lakh crore, also up 10% YoY [2][15] - IDFC First Bank experienced a 75% YoY increase in standalone net profit to Rs 352.31 crore, although net interest income (NII) fell sharply by 40% YoY to Rs 5,112.57 crore [5][15] - IndusInd Bank posted a net loss of Rs 437 crore in Q2, reversing from a net profit of Rs 1,331 crore in the same quarter last year, with NII declining by 17.6% YoY to Rs 4,409 crore [6][15] - ICICI Bank reported a 5.2% YoY growth in profit after tax to Rs 12,359 crore and a 7.4% increase in NII to Rs 21,529 crore [7][15] - HDFC Bank's standalone net profit grew by 10.8% YoY to Rs 18,641.28 crore, with NII increasing by 4.8% YoY to Rs 31,550 crore [8][15] - UltraTech Cements saw a 75.2% YoY increase in net profit to Rs 1,232 crore, with net sales rising 21.3% YoY to Rs 19,371 crore [9][15] - JSW Energy reported a 17% decline in consolidated Q2 net profit to Rs 705 crore, while revenue from operations increased by 60% YoY to Rs 5,177 crore [10][15] - Yes Bank's net profit rose by 18% YoY to Rs 654 crore, with core net interest income increasing by 4.6% [13][16] Strategic Developments - RBL Bank plans to initiate a wealth management business following Emirates NBD's acquisition of a 60% stake for $3 billion, marking a significant cross-border acquisition in the Indian financial sector [11][15] - Realty firm Sobha is set to launch residential projects worth Rs 22,000 crore over the next 18 months across multiple cities [12][15] - IndiGo has placed a firm order for 30 additional A350-900 planes from Airbus to support its international expansion [14][16]

Summary of the Conference Call on Greater China Cement Industry Industry Overview - The Chinese cement industry is experiencing a slowdown in domestic demand, prompting companies to seek growth through overseas expansion, particularly in developing markets in Southeast Asia, Central Asia, and Africa [2][31] - Cement prices in China are significantly lower than in these target markets, with prices in China being less than US$50 per ton [2][31] Key Insights on Overseas Expansion - **Focus on Africa**: Africa has become a primary target for Chinese cement producers due to its low per-capita cement consumption, strong growth potential, and high profitability. Urbanization and population growth are expected to drive demand [3][66] - **Southeast Asia**: Initially the first region for expansion (2015-2020), demand growth has slowed, and competition has intensified [3] - **Central Asia**: Countries like Uzbekistan have seen profitability decline due to overcapacity, while Tajikistan and Kyrgyzstan maintain high cement prices due to limited new capacity [3] Infrastructure Projects Driving Demand - Major infrastructure projects, such as the China-Laos railway and the upcoming China-Kyrgyzstan-Uzbekistan railway, are expected to create incremental demand for cement [4][62] - The China-Kyrgyzstan-Uzbekistan railway is projected to generate 5.2 million tons of incremental demand over six years [62] Company-Specific Insights - **Huaxin Cement**: - Recognized as a leader in overseas expansion with a strong focus on Africa and Central Asia [5][66] - Expected overseas cement shipment volume to grow from 16.2 million tons in 2024 to 25.8 million tons in 2027, with gross profit contribution from overseas rising from 32% to 49% [15] - Initiated coverage with a price target of HK$21.8, rated as Overweight due to attractive valuation and high profitability [7][19] - **Anhui Conch**: Focused on Southeast and Central Asia, with a growing overseas gross profit contribution [5][15] - **West China Cement (WCC)**: Also expanding in Central Asia and Africa, with significant growth in overseas shipment volume expected [5][15] Market Dynamics and Risks - The domestic cement market in China is projected to remain in surplus despite capacity reductions, with a 20% capacity exit expected during 2025-2026 [14][22] - Risks associated with overseas expansion include political stability, foreign exchange stability, and competition, which vary by country [20] Conclusion - The Chinese cement industry is shifting its focus from domestic markets to international opportunities, particularly in regions with higher profitability and growth potential. Companies like Huaxin are well-positioned to capitalize on these trends, supported by strategic acquisitions and infrastructure projects that will drive demand in target markets [6][66]

Summary of the Conference Call on Greater China Cement Industry Industry Overview - The Chinese cement industry is experiencing a slowdown in domestic demand, prompting companies to seek growth through overseas expansion, particularly in developing markets in Southeast Asia, Central Asia, and Africa where cement prices are significantly higher than in China (less than US$50/t) [2][30] - The domestic cement production peaked in 2014 and has been declining, with a 10% year-over-year drop to 1.8 billion tons in 2024, primarily due to a downturn in the property sector [12][21] Key Players - **Huaxin Cement**: Initiated with an Overweight (OW) rating, it is well-positioned for overseas expansion due to its significant presence in Africa and strong growth outlook [6][18] - **Anhui Conch**: Focused on Southeast and Central Asia, with a strategy primarily based on new builds [5][16] - **West China Cement (WCC)**: Concentrated on Central Asia and Africa, with a high gross profit margin from overseas operations [5][16] - **China National Building Material (CNBM)**: Engaged in operations in Africa and Asia, with plans for further expansion into the Mediterranean region [5][16] Overseas Expansion Insights - Chinese cement companies are shifting their overseas strategy from new builds to acquisitions to maintain local supply-demand balance [5][16] - Huaxin's overseas cement shipment volume is projected to grow from 16.2 million tons in 2024 to 25.8 million tons in 2027, with gross profit contribution from overseas cement rising from 32% to 49% during the same period [14] - WCC's overseas shipment volume is expected to increase from 3.6 million tons in 2024 to 13.4 million tons in 2027, with gross profit contribution growing from 54% to 67% [14] Infrastructure Projects - Major infrastructure projects, such as the China-Laos railway and the upcoming China-Kyrgyzstan-Uzbekistan railway, are expected to drive incremental demand for cement [4][15][60] - The China-Kyrgyzstan-Uzbekistan railway is projected to generate 5.2 million tons of incremental demand over six years, benefiting companies like Huaxin [60] Market Dynamics - The cement market in Africa is characterized by high prices, often exceeding US$100/t, with some regions reaching US$200-300/t [61] - Central Asia shows low cement consumption per capita and high growth potential, particularly in Uzbekistan, which has seen significant capacity expansion [58] Risks and Challenges - Risks associated with overseas expansion include political stability, foreign exchange stability, competition, and demand growth, which vary by country [19] - The Chinese cement industry is expected to face overcapacity issues even after a projected 20% reduction in capacity due to supply control policies [13] Financial Projections - Huaxin's price target is set at HK$21.8, reflecting its attractive valuation based on high profitability and earnings growth visibility [6][18] - The gross profit margin for domestic operations has declined to 15-25% amid a demand slowdown, while overseas operations maintain a higher margin of approximately 40% [41] Conclusion - The Chinese cement industry is navigating a challenging domestic environment by strategically expanding overseas, particularly in high-growth markets. Companies like Huaxin are positioned to capitalize on this trend, supported by infrastructure projects and favorable market conditions in targeted regions.

Core Viewpoint - The domestic markets have remained stable despite challenges such as US tariffs and significant foreign institutional investor selling, supported by favorable monsoon conditions and expected recovery in domestic demand [1][2]. Market Analysis - The Nifty is valued at a 15-year average P/E multiple of 19.2x, with a 12-month target of 28,781, reflecting an increase from the previous target of 27,609. In a bull case scenario, the target rises to 30,220, while in a bear case, it drops to 25,903 [3]. Sector Performance - Domestic-oriented sectors are expected to outperform, with banks, NBFCs, auto, retail, consumer staples, defense, metals, and select durables identified as key outperformers [4]. Earnings Forecast - Strong growth is anticipated for Q2FY26, with a projected 9.7% rise in sales, 11.2% growth in EBIDTA, and a 9.9% increase in Profit Before Tax (PBT) [5]. Growth Drivers - The growth trajectory is expected to be driven by commodities such as metals, cement, and oil and gas, along with sectors like telecom, AMC, and EMS. Conversely, banks, Housing Finance Companies, media, and travel sectors are projected to see a decline in PBT [6]. Stock Recommendations - Preferred large-cap stocks include Adani Ports, Apollo Hospitals, Britannia, HAL, ICICI Bank, and ITC. Mid/small-cap picks include Amber Enterprises, DOMS Industries, Eris Lifesciences, and Voltamp Transformers. Recent additions to conviction picks are Mahindra & Mahindra, Tata Steel, State Bank of India, Amber Enterprises India, and Latent View Analytics, while Bharti Airtel, Aster DM Healthcare, Crompton Greaves Consumer Electricals, and Ingersoll Rand (India) have been removed [7].

Company Expansion - Dangote Cement has opened a plant in Ivory Coast [1] Market Dynamics - Ivory Coast has one of the fastest-growing economies in the region [1]

Market Overview - Indian benchmark indices ended the week with gains of 1.6%, supported by strength in IT and healthcare stocks. The Nifty closed 103.55 points, or 0.41%, higher at 25,285.35, breaking out of a recent consolidation range [1][19]. Earnings Reports - Over 200 BSE-listed companies are set to announce their September quarter results this week, including major players like HCL Technologies, Tech Mahindra, Axis Bank, HDFC Life Insurance, Infosys, Nestle India, Wipro, JSW Steel, Reliance Industries, HDFC Bank, ICICI Bank, and UltraTech Cement [2][19]. - Non-Nifty companies such as IDFC First Bank, Yes Bank, Indian Railway Finance Corporation (IRFC), IndusInd Bank, and HDB Financial Services are also expected to report results [5][19]. - The market will react to DMart's earnings announced on Saturday [6][19]. Market Influences - U.S. President Donald Trump's threat to impose additional 100% tariffs on China may impact Asian markets, including India, following China's aggressive export curbs on rare earth minerals [7][19]. - U.S. equities fell sharply on Friday, with the Dow Jones Industrial Average down 878.82 points (1.90%), the S&P 500 down 182.60 points (2.71%), and the Nasdaq Composite down 820.20 points (3.5%) [8][19]. IPO Activity - The primary market is expected to remain quiet, with only one new mainboard IPO, Midwest, opening for subscription. Bidding will conclude for three ongoing mainboard issues and three SME offerings [9][19]. - Anticipated listings include Tata Capital and LG Electronics, scheduled for Monday and Tuesday, respectively, along with eight other companies set to debut during the week [9][19]. Corporate Actions - Key corporate actions include the record date for the 1:10 stock split of Tata Investment Corporation and the rights issue of Utkarsh Small Finance Bank on October 14, and the interim dividend of Rs 11 per share for Tata Consultancy Services (TCS) on October 15 [10][19]. Institutional Activity - Foreign institutional investors (FIIs) were net buyers last week, purchasing equities worth Rs 3,603 crore over five sessions, with Friday's purchases totaling Rs 459.20 crore [11][19]. - Domestic institutional investors (DIIs) also turned net buyers at Rs 8,391.2 crore for the week, with Friday's purchases amounting to Rs 1,707.83 crore [11][19]. Technical Analysis - Nifty formed a sizable bullish candle with a higher high and higher low on the weekly chart, indicating a continuation of the uptrend. The index closed above its short-term moving averages, retracing over 80% of its previous decline [12][19]. - The index is expected to maintain a positive bias, potentially heading towards 25,450, with further upside towards the June 2025 high of 25,670 if it moves above 25,450 [13][19]. Currency and Commodities - The Indian rupee closed stronger at 88.6850 against the U.S. dollar, compared to 88.7825 in the previous session, aided by RBI intervention [14][19]. - Brent and U.S. crude futures fell sharply, with U.S. WTI crude settling at $58.24 (down $3.27 or 5.32%) and Brent futures around $62.73 (down $3.13 or 4.80%) [16][19]. Investment Trends - With Diwali approaching, there is rising investor interest in gold and silver, while equities have seen pressure, with net inflows into equity mutual funds declining for a second straight month to Rs 30,422 crore in September, a 9% drop from August [17][19]. - In contrast, record sums were poured into gold exchange-traded funds (ETFs), with inflows rising fourfold to Rs 8,363 crore, marking the highest-ever monthly inflow for the category [18][19].

Economic Overview - Russia's nominal GDP stands at $2.2 trillion, comparable to its level in 2013, prior to the annexation of Crimea [1] - The economy contracted by 1.4% in 2022 but is projected to grow by 4.1% in 2023 and 4.3% in 2024, with a forecasted slowdown to 1.0% growth this year [8] Sector Performance - Non-military sectors of the economy have contracted by 5.4% since the beginning of the year, indicating significant economic strain [2] - The construction industry is facing a downturn, with cement consumption expected to fall below 60 million tonnes, a level not seen since the COVID pandemic [5] Labor Market Adjustments - Major companies, including Cemros, Russian Railways, and GAZ, have implemented a four-day workweek to manage labor costs amid economic challenges [6][12] - The unemployment rate has reached a record low of 2.1%, despite the economic difficulties [8] Government Intervention - The Russian government has been compelled to provide support across various sectors, including coal and metals, to prevent mass layoffs [17] - In previous economic downturns, state support was extended to major employers to mitigate discontent in industrial towns [16] Industry-Specific Challenges - The coal sector is particularly affected, with reports of 19,000 layoffs in the first half of 2025 and warnings of potential bankruptcies among coal enterprises [18][19] - The steel industry is also under pressure, with discussions of a moratorium on bankruptcies and indications of workforce reductions without mass layoffs [21][22]

Economic Overview - Russia's nominal GDP stands at $2.2 trillion, similar to its level in 2013, prior to the annexation of Crimea [1] - The economy contracted by 1.4% in 2022 but is projected to grow by 4.1% in 2023 and 4.3% in 2024, with a forecasted slowdown to 1.0% growth this year [8] Sector Performance - Non-military sectors of the economy have contracted by 5.4% since the beginning of the year, indicating significant economic strain [2] - The construction industry is facing a downturn, with cement consumption expected to fall below 60 million tonnes, a level not seen since the COVID pandemic [5] Labor Market Adjustments - Major companies, including Cemros, Russian Railways, and GAZ, have implemented a four-day workweek to manage labor costs and avoid layoffs [6][12] - The unemployment rate has dropped to a record low of 2.1%, despite the economic challenges [8] Government Intervention - The Russian government has been compelled to provide support across various sectors, including coal and metals, to prevent mass layoffs and economic discontent [17][16] - In previous downturns, state support was extended to major employers, indicating a pattern of intervention during economic crises [16] Industry-Specific Challenges - The coal sector is particularly affected, with reports of 19,000 layoffs in the first half of 2025 and financial health deteriorating for many enterprises [18][19] - The steel industry is also under pressure, with discussions of a moratorium on bankruptcies and a quiet cutback in operations due to high interest rates and weak demand [21][22]