Main points:
Demand: the advance of special debt and the overweight of infrastructure will significantly boost the cement demand in 2022q1. We believe that the overall trend is that the short-term is higher than expected and the medium and long-term space is large. In 2022, the steady growth policy will be strengthened, and the main focus will be on the vigorous development of infrastructure. Under the background of the advance issuance of special bonds and the acceleration of the commencement of major projects, the cement demand from 2022q1 to H1 will be strongly supported. In terms of total amount, the cement demand created by infrastructure construction will increase significantly in 2022, and most of it will be released in the first half of the year.
Supply: the capacity of the cement industry is expected to continue to shrink
From 2021 to 2022, under the continuous influence of energy consumption control and double carbon policy, the peak shift production time of cement enterprises in most regions has been extended. The implementation measures for capacity replacement of cement glass industry (Revised Version) implemented in August 2021 increases the capacity replacement ratio of cement clinker in key areas of atmospheric prevention and control and non key areas of atmospheric prevention and control from 1.5:1 and 1.25:1 to 2:1 and 1.5:1 respectively, compared with the capacity replacement measures in 2017. Peak shifting production and strict capacity replacement promote the continuous reduction of the capacity of the cement industry in 2022. We believe that the improvement trend of cement supply pattern will continue in the medium and long term, and the regional concentration of cement leaders will increase, resulting in the improvement of bargaining power and cost transmission ability, which is expected to further improve the profitability of cement enterprises.
Price: the price of clinker rises in advance, and the price of cement may enter the upward range with the progress
Affected by the continuous rise of clinker prices, cement prices may follow the progress into the upward range. As the clinker price rises ahead of time after the year, the price stabilization mentality of cement enterprises is also strong. Some cement enterprises along the river and surrounding markets in East China want to raise the cement price in the near future to release a signal to the market, but the demand of cement market in East China still needs to be restored, so the price increase may be difficult to implement. According to historical data, the rise of clinker price is about one round ahead of the rise of cement price. On the whole, the clinker price in East China's Riverside market has started the second round of rise recently, and the cement price may follow up and adjust. According to the statistics of the Ministry of industry and information technology, in 2021, the main business revenue of cement enterprises above designated size was 1.07 trillion yuan, a year-on-year increase of 7.3%, and the total profit of cement enterprises above designated size was 169.4 billion yuan, a year-on-year decrease of 10.0%. In 2022, the high price of cement starts the year, which is superimposed on the continuous high operation of water coal price difference. We believe that the marginal improvement of the profitability of the cement industry in 2022 has strong certainty.
Investment advice
The "spring agitation" market of the cement sector superimposes the steady growth and strengthens the expectation, and the allocation value of the cement sector is prominent. At present, there is still a large space for valuation and repair in the cement sector. The valuation level of the main leaders in the cement industry is still at the bottom. The current time point is in the empty window period of data. The valuation and repair is mainly driven by the expectation of steady growth. In the short term, the demand can be verified by paying attention to relevant high-frequency data, such as cement delivery rate and storage capacity ratio. In the future, if the relevant investment data meet the expected improvement, it will continue to play a catalytic role in the upward market of the cement sector. In addition, the dividend yield of the main leaders in the cement industry has reached a high point in recent years, with a high margin of safety. In the medium and long term, the pattern optimization of the cement industry is expected to continue, and the profitability of the cement industry is expected to enter a higher range. Therefore, at the current time point, the cement sector currently has high allocation value, whether from the perspective of short-term allocation or long-term holding. Recommend Anhui Conch Cement Company Limited(600585) and pay attention to Guangdong Tapai Group Co.Ltd(002233) .
Risk tips
The implementation of policies related to "steady growth" is less than expected; The growth rate of infrastructure and real estate investment has decreased significantly, which is at risk; The price rise of raw materials and fuels exceeded expectations; Supply side capacity contraction was less than expected.
