Moody's ups West China Cement

Moody's Investors Service said it upgraded West China Cement Ltd.'s corporate family and senior unsecured ratings to Ba3 from B1.

The outlook is stable.

The upgrades reflect an expectation that the improvement in West China Cement's revenue and profitability will be sustainable, supported by higher cement prices, which are driven in turn by a favorable structural change in the supply and demand dynamics of its key cement markets, Moody's said.

The change in its key markets in Shaanxi, Guizhou and Xinjiang provinces is driven by the sustained improvement in supply levels and pricing discipline, the agency said.

The upgrades come after news that the company is likely to post a substantial increase in net profit for the year that ended Dec. 31, 2017 as compared with its results in 2016.

The positive profit alert reflects a non-recurring foreign exchange gain, Moody's said, and a rise in revenue resulting from higher average selling prices for cement.

The upgrades also consider an improvement in capital structure as evident by West China Cement's improved leverage and liquidity as a result of positive free cash flow generation, the agency said.

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