Recent industry trends and core views:
Recent developments in the cement industry: the cement index fell 2.40% last week, underperforming the CSI 300 and building materials index. From January to February, the cement output was 199 million tons, a year-on-year decrease of 17.8%. Mainly due to the poor performance of the demand side, the average value of the overall cement shipment rate from January to February was 12 PCT lower than that of the same period last year, and the efforts of peak shift shutdown were strengthened. Last week, the national cement market price was 516 yuan / ton, up 0.3 yuan / ton month on month. The price increases are in Zhejiang, Fujian, Henan and Tibet, with a range of 20-50 yuan / ton; The falling areas are Heilongjiang and Guizhou, with a range of 30-90 yuan / ton. In mid March, the demand of China's cement market was affected by the multi-point spread of the epidemic, the construction progress of the project was restricted, and the improvement of cement shipments this week was limited. In terms of price, due to the obvious increase in the cost side, the cement price in some regions maintained an upward trend; Northeast China has just started because of the demand, and the price has dropped from a high level to a reasonable level. In the short term, due to the outbreak of the epidemic in many parts of the country, the government control is relatively strict, and the recovery of downstream demand is affected. After the epidemic is controlled, the demand will be released intensively, and the price will continue to rise.
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 government work report mentioned the target of GDP growth of 5.5% in 2022, the confidence of steady growth is further strengthened, and cement is expected to benefit. We judge that the demand side of the whole year is still resilient. It is 22q1 or the low point of the industry. From Q2, with the year-on-year weakening of the impact of coal price + the opening of price rise, the performance may improve quarter by quarter. 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.
