JPM sees Europe's decarbonisation drive boosting cement industry

CRH

01/06/2023 07:52

** J.P.Morgan says perception of the European cement sector
is "on the cusp of changing" and can start to attract more
investors as decarbonisation efforts boost industry fundamentals
    ** JPM says the sector has started rerating from valuation
lows connected to carbon headwinds thanks to supportive drivers
for cyclicals such as falling energy costs and positive
commentary on pricing
    ** While the broker sees more positive medium-term outlook
for the industry, it says shorter-term questions remain on
pricing sustainability and volume decline seeping into 2024
    ** "We are starting to see evidence of improving pricing
power with more rational behavior from participants, who no
longer see chasing volumes as an economically viable strategy,"
JPM says
    ** It points to Heidelberg Materials  HEIG.DE  as the
"biggest opportunity" with the "most aggressive" decarbonisation
target and low sell-side sentiment; upgrades stock to
"overweight"
    ** It keeps "overweight" on CRH  CRH.L  and "neutral" on
Holcim  HOLN.S 
    ** The broker stays "underweight" on Buzzi  BZU.MI , citing
the company's higher than sector average exposure to Eastern
Europe, particularly Russia
    ** Shares of Heidelberg Materials rise 3% in early Frankfurt
trade

 (Reporting by Anna Mackenzie)
 ((Anna.mackenzie@thomsonreuters.com))