Key investment points
The resumption of trading has been a steady growth cycle for nearly a decade, and the setting of steady growth is an important layout time point. The verification period of economic data drives the change of market expectations. We resumed the three rounds of steady growth and accompanying monetary easing cycles in 2011, 2014 and 2018, and divided each cycle into 1) policy setting and data window period, 2) economic data verification period and 3) fundamentals verification period. We found that the three rounds of steady growth cycle have four characteristics: ① at the initial stage of each round of steady growth (including the data vacuum period), after the policy setting, the market has an upward trend under the influence of policy expectations, and the cement sector can achieve about 10% excess return. ② Economic data validation period: generally, there will be a shock downward, mainly due to the time lag from policy setting to transmission to the economic system. Each release of economic and financial data will promote the market to adjust economic expectations, resulting in a shock trend. ③ Fundamentals verification period: the ability to obtain excess returns has been differentiated in previous stable growth cycles. The stock price trend of the cement sector has gradually changed from the valuation driven by past expectations to performance driven. If the basic orientation is good, the sector is expected to obtain significant excess returns. ④ The impact of RRR and interest rate cuts on the cement sector is not obvious in the short term, but after the continuous monetary easing promotes the market to rise, the cement sector will also benefit from the continuous rise.
At present, it belongs to the period of empty window of economic data, and the layout of cement sector is expected to obtain excess returns. This round of steady growth signals began on December 3, 2021, when the premier of the State Council met with the president of the International Monetary Fund and proposed to reduce the reserve requirement in due time. On December 6, the central bank announced the reduction of the reserve requirement. In mid December, the central economic work conference proposed that the current economy is facing triple pressure and set the tone to stabilize growth. Then the central bank started the cycle of interest rate reduction and easing. We believe that this steady growth cycle is more similar to 2011 in terms of time node. The timing of steady growth is the central economic work conference in December, followed by a period of empty window of economic data, which means that before the disclosure of economic data in March, the cement sector is expected to benefit from steady growth and realize excess returns. Therefore, it is an important layout timing of the cement sector at present.
Cement demand is expected to decline slightly in 22 years, but maintain a high platform period, and the willingness of supply coordination is expected to increase instead of decrease. We expect that under the steady growth of infrastructure construction and the decline of real estate demand, the cement demand will shrink in 22 years, but it is still in a high platform period. The annual output is expected to decline in single digits year-on-year, and the total volume will remain more than 2 billion tons. In the 21st year, the national net production capacity increased by 7 million tons (a year-on-year increase of 0.4%), and the new production capacity decreased. In the context of shrinking demand, enterprises are expected to strengthen their willingness to cooperate on the supply side in order to maintain the steady development of the market, and areas with poor supply pattern in the past, such as Yunnan, Guizhou and Northeast China, have been significantly improved.
The cement price center is expected to remain relatively high and the enterprise has strong business toughness. As of January 28, 2004, the average price of high-standard cement in China was 518 yuan / ton (unchanged month on month, year-on-year + 75), and the price center remained high. Under the low inventory level, the price of clinker along the Yangtze River Delta increased by 30 yuan on February 7, making a good start for 22 years. From the perspective of cost, the market price center of thermal coal is expected to be 700-900 yuan / ton in 22 years, which is lower than that in 21 years, but higher than the average value in 16-20 years. We expect the cement price center to be stable and the profitability to be improved in 22 years. It is expected that by the end of the first quarter of 2012, infrastructure projects are expected to be implemented, and the performance of cement enterprises may be improved quarter by quarter.
The valuation of the sector is at a historical low, the medium and long-term pattern is optimized, the extension of the industrial chain contributes to growth, the short-term relative income is obvious, and the long-term value is prominent. As of February 7, 2012, PE (TTM) of SW cement sector was 8.8 times, pb1.5 times Three times, all at historic lows. On the one hand, the short-term allocation of cement sector is expected to obtain excess returns under the expectation of stable growth. On the other hand, the valuation is low, the safety margin of cement allocation is high, and the defensive attribute is prominent. In the medium and long term, the sufficient capital advantage of cement is helping the industry to accelerate the integration and merger, the leading enterprises are expected to become bigger and stronger, the regions with poor pattern will also benefit from improvement, and the extension of the industrial chain of cement enterprises into aggregate, commercial concrete and other markets will fully contribute to growth. Under the optimization of the supply pattern driven by the dual carbon policy, we suggest that investors pay attention to the "long-term" investment opportunities of enterprises and look at the long-term development. We continue to focus on Anhui Conch Cement Company Limited(600585) , Huaxin Cement Co.Ltd(600801) , and suggest to focus on Gansu Shangfeng Cement Co.Ltd(000672) , China building materials, Xinjiang Tianshan Cement Co.Ltd(000877) , Guangdong Tapai Group Co.Ltd(002233) , Jiangxi Wannianqing Cement Co.Ltd(000789) , China Resources Cement, etc.
Risk warning: the risk of demand falling short of expectations, the risk of loosening supply side constraints, the risk of sharp rise in raw material and energy prices, the risk of delayed information or untimely update, and the risk of failure of cycle law.
