Recent developments in the cement industry: the cement index rose 0.85% last week, underperforming the building materials index. From January to April, the cement output was 581 million tons, a year-on-year decrease of 14.8%. In April, the cement output was 195 million tons, a year-on-year decrease of 18.9%. The decline was expanded month on month. First, the epidemic hindered the recovery of demand in some regions, especially the poor road transportation, and second, the shortage of funds made the commencement rate of the project low. Last week, the national cement market price was 487 yuan / ton, down 8.2 yuan / ton month on month. The price drop areas are still concentrated in North China, Central South of East China and southwest, with a range of 20-40 yuan / ton; The price rise areas are Jiangxi and Hunan, with a range of 30-50 yuan / ton. In mid May, with the decrease of heavy rainfall, the demand of China's cement market improved slightly, and the shipment rate of enterprises increased by 5% month on month. As the overall shipment level remained at the level of 60-70%, the inventory continued to operate at a high level, and the cement price continued to decline.
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%. There is still room for subsequent increase. The government work report mentioned the goal of GDP growth of 5.5% in 2022, and the confidence of steady growth was further strengthened. We judge that the demand side of the whole year is still resilient. The price of Q1 cement is still higher than that of the same period last year, reflecting that the price transmission capacity is still, but the profit is declining due to more sales losses. We judge 22q1 or the low point of the industry. After the recovery of Q2 epidemic, the cement delivery is expected to improve, and the price is expected to rise. However, considering that the plum rain season is approaching, it is expected that the overall performance pressure of cement enterprises in the second quarter will remain, and the performance in the second half of the year is worth looking forward to. With the year-on-year weakening of the impact of coal prices + the price rise in peak season, the performance recovery elasticity is large, and 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.
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