In addition to the production capacity increase, the long term growth of Conch Cement is much more due to the improvement of profitability. Conch Cement has a powerful resource advantage which contributes to the merger, acquisition and profitability control. With incremental production capacity decreasing and market concentration increasing, the profitability will be improved. According to the actual data, in the first half of 2013, the price can keep at a high level in the little incremental production areas even if the demand hardly increases, and there is an even more price rising in demand increase areas, such as Jiangsu and Gansu provinces.(translator:Zhongchongren)

From: Guotai Junan Securities