Environmental protection has become stricter, and the attribute of aggregate resources has become prominent. From the demand side, the downstream of aggregate is infrastructure and real estate, and its demand is directly related to cement sales and highway / railway construction mileage. It is expected to remain high and stable in the next few years. On the supply side, under the background of stricter environmental protection policies and limited natural sand and gravel mining, small enterprises have been gradually eliminated, the industry concentration has been significantly improved, regional supply and demand mismatch and tight sand and gravel supply are frequent, and the aggregate price has increased steadily in recent years.
At present, the income from mining is still considerable, but the bidding needs to be rational. The unit value of aggregate is low and the freight cost accounts for a high proportion. It is a short leg product with strong regional attributes. In recent years, with the increase of terminal price, the cost of mining has also increased. On the whole, the current mining income is still considerable, but there are great regional differences, and the high price winning projects in individual regions may be unprofitable. The cost of mining in the north is very low, and even if the terminal price is low, the project can still achieve good benefits. The main problem is that it is only suitable for highway transportation and it is difficult to build a large aggregate production line; The average mining cost in Zhejiang and Guangdong has been high, and the yield of some projects is even lower than the average financing cost of enterprises; For the sand and gravel mines located in the middle and upper reaches of the river and adjacent to the river, on the one hand, the mining cost is low, on the other hand, the aggregate can be transported to the Yangtze River Delta and Pearl River Delta with strong demand and high price through low-cost water transportation, and the mining yield is very high. From the perspective of investment, rather than tangle with the yield of a single project, it is better to focus on which enterprises have the willingness to vigorously layout aggregate business and specific development rhythm.
Compete for layout, and strive for resources in the post cement era. From overseas experience, expanding aggregate business is the common choice of the three global cement giants, and it is the main support point to contribute to performance growth outside their main cement industry. In recent years, Chinese cement enterprises have increasingly realized the importance and strategic significance of aggregate business. Most cement listed enterprises continue to accelerate the pace of expansion in the field of aggregate. Under the background of limited new cement production capacity in China, the aggregate business is expected to become an important driving force for the performance growth of cement enterprises. Huaxin Cement Co.Ltd(600801) is a pioneer in vigorously expanding aggregate in China’s cement industry. After the production line under construction is put into operation, the aggregate production capacity is expected to reach 200 million tons / year. The Huaxin (Yangxin) 100 million ton machine-made sand project to be put into operation is the largest aggregate production line in the world. It is located in Fuchi Town, Yangxin County, Huangshi City, near the river in the middle reaches of the Yangtze River. It can transport sand and stone to the Yangtze River Delta through the Yangtze River water transportation, with significant profitability. It is expected to contribute significant performance increment to the company after it is put into operation.
Risk tip: infrastructure and real estate investment decline; Increase in ore acquisition cost; Centralized release of production capacity.
