UPDATE 2:  West China Cement Targets USD Bond Issue in Mid-Oct to Nov, Mandates CICC, HSBC, JPM as Bookrunners; To Receive 80% of CNY 1.65B Xinjiang Sales Proceeds by Sept, 94% by End-2025

Wed Aug 27, 2025 05:15 AM ET: Hong Kong-listed West China Cement Ltd. aims to launch a USD dollar bond offering during a suitable window from mid-October through November, according to two buyside sources citing management.

The Chinese cement manufacturer, which made the comments during post-results small group meetings with fixed income investors yesterday afternoon, Aug. 26, and today, added that it has already appointed CICC, HSBC and J.P. Morgan to run the deal, the sources said.

Management had guided during its post-results investor presentation on Tuesday morning plans for an around $300 million USD bond offering by the end of this year to part refinance $600 million, 4.95% due July 2026 notes, which it aims to settle via a tender offer funded also with cash flow and proceeds from recently completed Xinjiang asset disposals, as Octus reported.

The due-26s’ offering memorandum shows that the company has the option to redeem the notes in whole or in part at 101.238 plus accrued interest from July 8, 2025 through the day before the July 8, 2026 maturity date.

The tender would likely be around par, said the same sources who attended the meetings.

The due-2026 notes were indicated this afternoon at 97.875/98.375, up about half a point so far today, according to two buysiders.

During the subsequent small group meetings, West China Cement stated that it has already applied to the National Development and Reform Commission, or NDRC, for a $600 million offshore issuance refinancing quota, and that management expects the approval by the end of September, sources said.

Xinjiang Installments

Management said during the meetings that it is scheduled to receive the first 40% installment of its total CNY 1.65 billion ($230.7 million) Xinjiang asset disposal proceeds this week, according to the sources.

The second 40% installment is expected in September, confirming Octus’ previous story, with the final 14% by the end of 2025, management added.

West China Cement on June 25 announced the agreement for the CNY 1.65 billion sale of production plants and other assets in Xinjiang to the company’s 29.1%-shareholder, state-backed Anhui Conch Cement, with a 40%-40%-14% payment installment schedule. The disposal was completed on Aug. 15.

China Operations

After disposing of its Xinjiang operations, management guided that West China Cement’s domestic operating cash flow, or OCF, is expected to decrease by approximately CNY 200 million per year, to around CNY 1.2 to 1.3 billion, primarily from plants in Shaanxi and Guizhou. The Xinjiang assets had annual sales of over 1 million tons and a gross margin of roughly CNY 100 per ton, contributing less than CNY 200 million in annual cash flow, management said.

During its post-earnings presentation Tuesday, management reiterated a “phased withdrawal” strategy from the Chinese market, especially outside of the company’s home province of Shaanxi, citing a persistent structural cement oversupply across Mainland China.

African Project Financings

During the meetings, management said the funding model for its African projects – the company’s current focus for growth – usually features a mix of bank loans and internal capital, said the sources.

Lender banks for the project financings consist of local African banks and international banks, including Standard Chartered and Standard Bank, which primarily evaluate the credit worthiness based on the specific projects being financed, not the group, said the sources.

Dividend Repatriation

Management assured investors at the meetings that there are no issues with repatriating funds from most of its African businesses, including in the Democratic Republic of Congo and Mozambique, said the sources.

As reported, West China Cement said at its investor presentation Tuesday that it is in talks with the Ethiopian government on its first-ever repatriation of a 2023 dividend of about $10 million from the Lemi plant, with the funds expected to arrive in August or September. Management confirmed during the small group meetings that the dividend is set to arrive in Hong Kong in September, sources said.

West China Cement did not respond to requests for comment.

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UPDATE 1: West China Cement Eyes ‘Phased Withdrawal’ From China Market, Overseas as Primary Profit Engine; Expects $10M Ethiopia Lemi Plant Dividend Repatriation in Aug-Sept

Tue Aug 26, 2025 06:26 AM ET: Hong Kong-listed West China Cement Ltd. Chairman Zhang Jimin said at a post-earnings investor presentation attended by Octus this morning, Aug. 26, that the cement manufacturer and distributor is planning a strategic “phased withdrawal” from the Chinese market, and will rely on its overseas operations as the primary growth engine.

West China Cement’s internationalization strategy has already led to a 178% year-over-year surge in overseas sales volume to 4.17 million tons in the first half of 2025. Overseas business, comprising primarily African operations but also includes plants in Central Asia, contributed to 43% of the company’s revenue and 58% of its gross profit, according to its interim results released Monday night, Aug. 25.

Management added today that it would also explore opportunities in Southeast Asia, including Malaysia.

During this morning’s presentation, management reiterated its plan for a gradual exit from domestic operations, especially outside of its core base in Shaanxi province, citing a persistent structural cement oversupply across Mainland China. Despite that, management noted that its Shaanxi operations have shown improved profitability, with the average selling price, or ASP, rising year over year from CNY 243 ($34) to CNY 260 per ton, while cost per ton down from CNY 213 to CNY 198 driven by lower coal prices, resulting in gross profit per ton more than doubled from CNY 30 to CNY 64.

As Octus reported earlier this morning, West China Cement plans to refinance $600 million 4.95% due July 2026 notes with a new around $300 million USD bond to be issued by the end of 2025, and a tender offer to be funded by the company’s own cash flow and proceeds from its recently completed asset disposals in Xinjiang, as reported.

The due 26s were indicated unchanged at 97/97.5 today, according to two buysiders. The notes have gone up more than five points from around 91.5/92.5 on July 24, as reported then.

Ethiopia

Management said its 62%-owned Lemi plant in Ethiopia, with a 5 MTPA capacity, has seen its utilization rate increase from about 50% in the first quarter of 2025 to over 70% in the second quarter. This ramp-up led to total sales of 1.99 million tons in the first half.

While the company’s current ASP in Ethiopia is around CNY 500, or $70, management described this as a temporary, strategic price and is working to gradually raise it to a target of $100 per ton.

Management also stated it is in talks with the Ethiopian government on the first-ever repatriation of a 2023 dividend of about $10 million from the Lemi plant, with the funds expected to arrive in August or September. This “pathfinder” case is intended to set a precedent for future transfer, the company said.

Mozambique

Management said its 2 MTPA Dugongo Cement SA. plant in Mozambique is currently operating at near 100% utilization.

In addition, a new 1.5 MTPA plant in Nampula is under construction with a total capital expenditure of $200 million and is expected to be completed by the end of 2026. West China Cement will own more than 80% of the new venture, according to management.

DR Congo / Great Lakes Region

Regional conflict heavily impacted sales from the company’s Goma plant in the Democratic Republic of Congo, causing the gross profit per ton to decline to CNY 171 in H1 2025 from CNY 413 a year ago. However, management expressed a promising outlook following a U.S.-brokered ceasefire agreement between the Republic of Rwanda and DR Congo signed in June 2025. Management expects the situation in the Great Lakes region to stabilize by the end of 2025, with gross profit recovering to around $70 per ton.

In addition to the ceasefire, the company is solidifying its market dominance through the acquisition of the 1.2 MTPA Cimenterie de Lukala SA plant, or CILU, an agreed transaction scheduled to be completed in the second half of 2025 that will make West China Cement the largest cement producer in the country, management said.

Uganda

Management stated that its new plant in Uganda, is set for commissioning in the first quarter of 2026. With a total investment of $240 million to $250 million, the project boasts a high market price of approximately $150 per ton against an estimated low production cost of just $50.

Uzbekistan

The 2.5 MTPA Andijan plant in Uzbekistan, West China Cement’s first in Central Asia, started production in May 2024 and is in an initial ramp-up phase but faces immediate market oversupply, management said. In the first half, utilization at the plant stood at about 60%, selling 800,000 tons.

Management stated that Uzbekistan’s cement market has become highly competitive due to the influx of several Chinese players. Meanwhile, the ASP remained reasonably stable at CNY 196 per ton, with a gross profit per ton of CNY 34.

West China Cement management, however, maintains a positive long-term outlook for Uzbekistan, citing strong local demand drivers including a government projection of 15% annual demand growth to support major infrastructure projects.

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Original Story 11:13 p.m. UTC on Aug. 25, 2025

BREAKING: West China Cement Targets ~$300M Bond Offering by End-2025 to Part Refi $600M 4.95% Due 2026 Notes; to Repay Rest of ‘26s With Own Cash, Xinjiang Asset Disposal Proceeds

Management of Chinese cement manufacturer and distributor West China Cement Ltd. said this morning that it’s targeting an around $300 million USD bond offering by the end of 2025 to partly refinance its $600 million 4.95% due July 2026 notes.

Speaking at an investor presentation attended by Octus, the company said it will refinance the 2026s through a tender offer funded with the new bond issue and its own cash flow and proceeds from its recently completed Xinjiang asset disposals. 

The plan remains preliminary, management said, adding that West China Cement will monitor market conditions including potential rate cuts to be announced by the U.S. Federal Reserve, to determine the yield for the new issue.

More to follow …