3Q20 results were in line with our expectations. In 1-3Q20, top lineincreased by 11.9% YoY to RMB123,984 million, 5.8% higher than ourexpectation. However, as gross profit was flat YoY and in line with ourexpectation, we believe that the higher-than-expected revenue mainly camefrom growth in negligible-margin trading business revenue. Bottom line wasup by 3.8% YoY to RMB24,719 million, in line with our expectation.
　　Cement market in east China has largely recovered while cement priceremains sluggish in southwest China. As shipments are expected toremain robust on strong infrastructure demand, we believe that cement pricewill continue to recover steadily despite some pressure from rebound ininventory level during October. However, we believe that it still may takesome time for supply and demand to rebalance in southwest China.
　　We have trimmed our EPS forecasts for 2020/ 2021/ 2022 by 3.0%/ 2.0%/1.5%, respectively. We have mainly: 1) lowered sales volume assumptionsand slightly trimmed ASP and unit cost assumptions for self-produced cementproducts; 2) raised sales volume assumptions for trading of cement products;and 3) slightly lifted SG&A expense assumptions.
　　Cut TP to HK$63.10 and maintain "Buy". We believe that the currentvaluation of the Company is attractive given stable outlook for infrastructuredemand in east China and south China, while concerns on property demandmay be overestimated. Despite delays caused by the COVID-19 pandemic,we maintain our confidence in the Company's strategic expansion towardsaggregates and overseas markets. Our latest TP represents 8.4x/ 8.3x/ 8.2x2020-2022 PE ratio and 1.8x 2020 PB ratio.