How did the cement index perform at the beginning of the year in the past ten years?
From the beginning of the past decade to the end of the peak season (5.30), the average increase of the cement index was 35.3%, 85% in 15 years and 14.5% in 21 years. We believe that in the past 21 years, the main reason is that after the impact of the epidemic weakened, the fundamental elasticity of glass, consumer building materials and other pro cyclical industries is greater. In contrast, the elasticity of cement as a counter cyclical industry is not high. In 2022, the importance of steady growth has increased, and the macro environment is more favorable. However, since the beginning of the year, the maximum increase of cement index is only 8.8%, so there is still room for subsequent rise. Since 2009, only the cement index of 10, 12, 13, 18 and 21 years has retreated from the Spring Festival to the end of May. Among them, the retreating range of 10 and 13 years is large, up to 19% / 21%, which is the high position of the index at the beginning of the year, while the maximum retreating of 18 and 21 years is only 4% / 2%. At present, we believe that the cement sector is still at the bottom area as a whole, and the current PE ttm/PB. LF is 9.0 / 1.1 times respectively, corresponding to the 26% / 4% quantile since 13 years. Therefore, we believe that the pullback risk of cement stocks is small before the end of the peak season in the first half of 22 years.
When will the cement sector start? When does it end?
In the past 13 years, most of the cement sectors were started before the Spring Festival, ranging from early January to early February. Only the start-up time of the cement sectors in 2014, 2016 and 2020 appeared after the Spring Festival. From the performance of the cement sector after new year's day in 2022, there is no continuous rebound, mainly because the cement demand has entered a downward period and the uncertainty on the demand side is increasing. Therefore, there are still many games at the beginning of the year. From the start-up time of cement index in 2014 and 2016, it appeared 10 / 3 days before the price rise of cement respectively, because the start-up of the index is often accompanied by the marginal change on the demand side. We believe that the social finance data in January is higher than expected or will become the catalyst for the 22-year index to open the upward channel. If the subsequent data (project operating rate, investment data, etc.) further confirms the good demand, it will be good for the sector; In terms of the duration of previous years, the cement index usually peaked before the price, but the current risk appetite has decreased compared with previous years. Any failure of the demand side to meet expectations may lead to the early end of the market.
When does the price of cement begin to rise?
On February 7, the price of clinker along the river in Anhui increased by 30 yuan / ton to 400 yuan / ton, a year-on-year increase of 80 yuan / ton, because: 1) at present, the overall inventory of clinker is low, the independent grinding station in the downstream society is basically empty, and the stock is relatively active; 2) The oversold of clinker price before the festival and the rise of coal cost drive the rise of clinker price. It is unlikely that the cement price will rise in the near future. In order to open the market, some regions may still reduce the price. However, considering the low inventory pressure of cement enterprises and the advance price rise of clinker, it is expected that the space for cement price adjustment in the near future is limited. In the past 13 years, the cement price began to rise in March. With the gradual recovery of demand after the Lantern Festival, it is expected that the cement price may start to rise in early March.
What do you think of the cement industry in the past 22 years?
On the demand side in the past 22 years, we expect that the decline of real estate will still cause a great drag on the demand for cement (the newly started area is expected to decline by 10% year-on-year). Under the background of steady growth, there is a great possibility of infrastructure development, but it is expected that it is still difficult to reverse the decline of overall demand. We expect the decline of cement demand in the next 22 years to be within 5%. According to the peak shifting production plan formulated by all provinces at the beginning of the year, except North China, the number of peak shifting production days in other regions in 22 years has increased compared with the average of 21 years. We expect greater supply side constraints in the whole year. At the same time, under the background of dual carbon and dual control, the speed of enterprise merger and exit of small production lines is expected to accelerate, and the supply and demand is still expected to maintain a tight balance. The increase of fuel costs such as coal and power costs and emission reduction costs such as energy conservation and consumption reduction are expected to drive the rise of the cement price center. The profit margin of the cement industry in 21 years decreased by 2.7pct year-on-year, reaching 15.8%. We expect that the profit margin of the industry in 22 years is expected to pick up.
Recommend Gansu Shangfeng Cement Co.Ltd(000672) , Huaxin Cement Co.Ltd(600801) and Anhui Conch Cement Company Limited(600585) with better growth, and pay attention to Jiangxi leading Jiangxi Wannianqing Cement Co.Ltd(000789) and northwest leading Gansu Qilianshan Cement Group Co.Ltd(600720) that are expected to benefit from infrastructure development.
Risk warning: the prediction is subjective or deviates from the actual situation; Demand recovery is less than expected; The implementation of peak shift shutdown was less than expected.
