China Ceramics Stock Tanks 15% on Weak Earnings; Says Challenges Will Persist in 2019

The company reported a steep revenue decline and a quadrupled net loss for 2018.

Author: CapitalWatch Staff   

The stock of China Ceramics Co. Ltd. (Nasdaq: CCCL) tanked more than 15 percent Tuesday, to $1.18 per American depositary share, after the company reported lower revenue and income for last year.

The manufacturer of ceramic tiles, based in Jinjiang, said in a statement today that its sales in the second half of 2018 "sharply" dropped under "difficult market conditions." Revenue in the six months through December reached just $20.8 million, 3.5 times less than CCCL generated in the second half of 2017. 

It reported net loss of $50.6 million, or $11.07 per share, compared with a loss of $12.4 million, or $3.66 per ADS, in the same period the prior year.

For the full year, CCCL posted revenue of $75.4 million, down 38 percent from 2017. Net loss quadrupled year-over-year to $63.3 million, or $14.10 per share, it said.

"After adjusting for asset write-offs, our cash flow was modestly positive for the second half of the year despite the market slowdown, and our cash flow was reasonably strong for the full year of 2018," the chief executive of China Ceramics, Jiadong Huang, said in the statement. 

He added, "For the fiscal year 2018, we utilized production facilities capable of producing 16.9 million square meters of ceramic tiles per year out of the Company's effective total annual production capacity of 56.5 million square meters of ceramic tiles. Consistent with our practices in past quarters, we maintained a reduced utilization of existing plant capacity based on the current market environment to keep our operating costs low."

Huang also said he expects the challenging market conditions to persist in 2019 as Beijing continues to implement regulatory changes in the real estate market.

He added, however, that he sees potential in certain areas of the market. "Urban renewal projects and an improvement in new home prices last month fueled by China's smaller tier cities could represent a potential turnaround in business conditions," Huang said.

"In the long-term, we believe our building materials sector will continue to benefit from growth in the real estate sector due to continued urbanization and its importance to China's domestic growth," Huang said. "We plan to capitalize on emerging trends in the sector such as affordable housing initiatives and the Government's promotion of rental properties that could spur future growth."