Recent developments in the cement industry: the cement index fell 6.41% last week, underperforming the CSI 300 and building materials index. Last week, the national cement market price was 515 yuan / ton, up 1.0 yuan / ton month on month. The price increases are mainly in some areas of Hunan, Chongqing, Guizhou and Hubei, with a range of 20-40 yuan / ton; The price drop areas are Beijing, Hebei, Ganzhou, Jiangxi and Pingliang, Gansu, with a range of 20-30 yuan / ton. In late February, the demand of the national cement market rebounded slowly, some areas were still disturbed by rain and snow, and the demand performance at the beginning of the week was poor, only about 20%, with no improvement over the previous week; At the weekend, with the weather improving, the downstream demand increased significantly, and the level in East China generally reached 40-50%; 30-40% in Central South and southwest China; The three northern regions are still in the start-up stage, only 1-20%. In terms of price, with the continuous rise of cement clinker price in the Yangtze River Delta, the prices of peripheral Jiangxi, Hubei, Chongqing and Guangdong have also increased. In addition, due to the rising cost of coal, cement prices in Hunan, Chongqing, Sichuan and Yunnan have been actively pushed up by enterprises to alleviate the pressure of operation. In the short term, despite the slow recovery of downstream demand at the beginning of the market, driven by the rise of cost side, the upward trend of cement prices in various regions is obvious. It is expected that in March, with the continuous improvement of downstream demand, cement prices in most regions will begin to rebound.
Core view: from the beginning of the past decade to the end of the peak season (5.30), the average value of the maximum increase of the cement index was 35.3%, the lowest in 21 years was 14.5%, and the maximum increase of the cement index since the beginning of the year was only 10%. We believe that the current policy environment is more favorable than that in 21 years, and there is still room for subsequent increase. The potential demand for 22q1 cement (delayed demand in the second half of last year + commencement of key projects) may exceed that in the same period of last year, The release of demand depends on the construction conditions and the landing of funds. If it is effectively landed, the downstream demand is expected to increase significantly at the end of February and early March, and the cement market is expected to usher in further catalysis, because the production end of the supply end was more constrained by peak shifting and shutdown in the first quarter, or caused local cement shortage. In the medium and long term, cement has entered a period of downward demand. In the future, the industry will focus on the opportunities brought by the change of the industry’s supply side under the objectives of “dual control” and “dual carbon”: a) the policy requires that the proportion of benchmark capacity in 2025 will exceed 30%, and the industry’s capacity of 2500t / D and below is expected to withdraw one after another in the future, and the total capacity will shrink by more than 8.6%. b) The cement industry is expected to be included in carbon trading in the future. The transformation of carbon tax + emission reduction intensifies the cost pressure of small enterprises, highlights the leading competitive advantage, is expected to further expand through mergers and acquisitions, enhance the voice, and gradually raise the price center. The demand side expects that the infrastructure side is expected to make a good start in Q1 in 22 years, and the bottom of the real estate side is expected to pick up. In the medium and long term, the cement industry as a whole may develop in the trend of “volume reduction and price increase”. After being included in carbon trading, it may accelerate the improvement of supply side concentration, and the improvement of leading share is expected to support performance growth. From the perspective of dividend yield and valuation, cement companies have high investment performance price ratio.
Recommend [ Gansu Shangfeng Cement Co.Ltd(000672) ], [ Huaxin Cement Co.Ltd(600801) ], leading [ Anhui Conch Cement Company Limited(600585) ], focusing on Jiangxi leading [ Jiangxi Wannianqing Cement Co.Ltd(000789) ] and northwest leading [ Gansu Qilianshan Cement Group Co.Ltd(600720) ], which are expected to benefit from infrastructure development.
Risk tip: the demand for cement has fallen sharply, the price rise in peak season is less than expected, and the competition in aggregate industry has intensified.
