Recent industry trends and core views:
Recent developments in the cement industry: the cement index rose 0.77% last week, continuing to rise slightly. Last week, the central bank announced a comprehensive RRR reduction. Except for some county legal person financial institutions that have implemented the 5% deposit reserve ratio, the deposit reserve ratio has been generally reduced by 0.5 percentage points for other financial institutions, releasing about 1.2 trillion long-term funds. The undervalued cement sector is expected to be repaired. The 2021 central economic conference held last Friday further emphasized the importance of steady growth, Help boost the expectation of cement demand side, And this year’s meeting mentioned “moderately advance infrastructure investment” (infrastructure investment has not been explicitly mentioned in the past 20 years). In the past 22 years, the infrastructure sector is expected to recover structurally, and may have a good start at the beginning of the year. The national cement market price was 563 yuan / ton, a month on month decrease of 12.1 yuan / ton, and a year-on-year increase of 107.3 yuan / ton. The price drop areas are mainly concentrated in Tianjin, Liaoning, Hubei, Hunan, Guangdong, Chongqing and Sichuan, with a range of 10-50 yuan / ton. In early December, China’s cement market price increased On the one hand, in the final demand period, downstream demand continued to be weak, enterprise shipments remained at the level of 60-80%, production in the South was normal, and enterprise inventory was running at a high level; On the other hand, in order to clear the cement produced at high cost in the early stage before the end of the market, cement enterprises in northern China have to adopt the price reduction strategy. Due to the poor market supply-demand relationship and the relatively high cement price, the price will continue to weaken in the later stage..
Core view: we expect marginal improvement in demand in the first half of next year, valuation or repair first, but it is difficult for the medium and long-term demand side to support the plate out of the sustainable market. In the future, the industry will focus on the opportunities brought by the change of industry supply side under the objectives of “double control” and “double carbon”: a) the policy requires that the proportion of benchmark capacity in 2025 exceed 30%, In the future, the industry’s capacity of 2500t / D and below is expected to withdraw one after another, and the total capacity will shrink by more than 8.6%. b) The cement industry may be incorporated into carbon trading in 2021. The transformation of carbon tax + emission reduction will aggravate the cost pressure of small enterprises, highlight the leading competitive advantage, and is expected to further expand through mergers and acquisitions, enhance the voice, and gradually raise the price center. At present, the price difference of water and coal is 60 yuan / ton higher than that of last year, reflecting that the profit of the enterprise is better than that of last year. We believe that the cement price may still be slightly adjusted from January to February in the future, but it is unlikely to fall sharply. The price is at a high starting point in the beginning of 22 years. On the demand side, it is expected that there will be marginal improvement on the infrastructure side in Q1 in 22 years, the bottom of the real estate side will pick up, and the demand is expected to begin to improve. Although the medium and long-term demand shows a slow downward trend, the improvement on the supply side may be greater under the background of carbon emission reduction, and the profits of leading enterprises are still expected to grow.
From the perspective of growth, [ Huaxin Cement Co.Ltd(600801) ] (the cement price in Southwest China is expected to get out of the depression, and the growth elasticity of overseas cement and aggregate business is high), [ Gansu Shangfeng Cement Co.Ltd(000672) ] (the growth elasticity of cement production capacity is large, and the development of one main wing and two wings injects new vitality into the company), and [ Anhui Conch Cement Company Limited(600585) ] (a national leader with both scale and cost advantages, which is expected to benefit the most after the implementation of carbon trading).
