Recent industry trends and core views:
Recent developments in the cement industry: the cement index rose 5.47% last week, outperforming the building materials index and the CSI 300. 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 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 shifting and shutdown were strengthened. Affected by the epidemic in March, the recovery of demand was blocked, and we expect the output to continue to decline significantly year-on-year. Last week, the national cement market price was 509 yuan / ton, down 3.1 yuan / ton month on month. The price decline areas are mainly concentrated in East China and Central South China, with a range of 20-30 yuan / ton; The price rise area is mainly Chongqing, with a range of 70-80 yuan / ton. After the Qingming Festival, the demand of China's cement market has increased slightly. Due to the recurrence of the epidemic, the control in areas is still relatively strict, especially the poor road transportation, which hinders the recovery of downstream demand. At the same time, due to the shortage of downstream funds, the demand is tepid, and the cement price maintains a volatile adjustment trend.
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, Guangdong Tapai Group Co.Ltd(002233) , Gansu Qilianshan Cement Group Co.Ltd(600720) successively disclosed the announcement of pre deduction of performance in the first quarter, and the net profit deducted from non parent company decreased by 50% - 60% and 73% - 88% year-on-year. We expect that the sales volume and gross profit per ton are lower than last year, but we judge that 22q1 or the low point of the industry. After the Q2 epidemic recovers, with the weakening of the impact of coal price year-on-year + the opening of price rise, the performance may improve quarter by quarter, and the whole year is still expected to achieve steady growth, The valuation is expected to be repaired. 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. 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 stocks still 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.
