1Q20 results slightly beat our expectations. Total revenue decreased by23.9% YoY to RMB23,207 million. We estimate that sales volume and ASP ofself-produced cement products dropped YoY by 21% and 9%, respectively.
　　Overall gross profit margin surged by 4.1 ppts YoY to 33.9% mainly on thelower proportion of low-margin trading business of total revenue.
　　Shareholders' net profit declined 19.2% YoY to RMB4,913 million.
　　A new uptrend in cement price has started in east China. Cement price ineast China started to bottom out in late April. We believe that the resumptionof toll collection of toll roads will enlarge inter-regional price gaps, which willbenefit Conch's core operating regions. We believe that the impact ofseaborne clinker will remain controllable based on differentiated pricingstrategy for cement and clinker.
　　We have lifted our EPS forecasts for 2020/ 2021/ 2022 by 2.9%/ 3.0%/3.1%, respectively. We have mainly: 1) revised down unit cost assumptionsto reflect the larger-than-expected drop in coal price; 2) slightly lifted ourassumptions for sales volume and ASP of self-produced cement products toreflect our better outlook on the cement market; and 3) trimmed sales volumeassumptions of trading business based on the shrinkage in 1Q20.
　　Raise TP to HK$67.90 and maintain "Buy". We believe that it is of greatercertainty that the impact of COVID-19 on the Company's annual results isexpected to be insignificant, and positive QoQ growth of the Company'sresults will be maintained in the remaining quarters of 2020. Our latest TPrepresents 9.6x/ 9.4x/ 9.3x 2020-2022 PE ratio and 2.0x 2020 PB ratio.