Recent developments in the cement industry: the cement index rose 3.41% last week, and the restless market is still rising again. The cement output from January to December was 2.363 billion tons, which was - 1.2% / + 1.4% respectively compared with the same period of 20 / 19 years. The cement output in a single month in December was 191 million tons, which was - 11.1% / - 4.0% respectively compared with the same period of 20 / 19 years, and decreased by 4.4% month on month. The decline of demand side in 21 years was still controllable. The State Council Information Office held a press conference on financial statistics last week, which once again released a positive signal of stable growth. The central bank cut interest rates as scheduled during the week, The landing effect of steady growth is expected to be gradually reflected, and the valuation of short-term positive undervalued sectors is expected to rise. Last week, the national cement market price was 518 yuan / ton, down 1.6 yuan / ton month on month, up 70.8 yuan / ton year-on-year. The price reduction areas mainly include Hunan, Chongqing, Yunnan and some parts of Jiangsu, with a range of 20-30 yuan / ton. In mid and late January, affected by off-season factors, China's cement market demand continued to shrink, with only 30-40% of enterprise shipments left. Cement prices continued to decline, but the decline narrowed. The market will enter the closed stage next week.
Core view: there is an obvious "restless spring" market in the cement index. In recent 20 years, the Q1 cement index has risen for 13 years, outperforming the Shanghai Composite Index for 16 years, and the average relative return in recent five years is 7%. We believe that the combination of the steady growth policy and the high starting point of prices in early 22 provides favorable support for this round of agitation, and the market can be expected in spring. In the future, the industry will focus on the opportunities brought by the change of industry supply side under the objectives of "dual control" and "dual 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 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. On the demand side, it is expected that the Q1 infrastructure side will make a good start in 22 years, and the bottom of the real estate side will 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". If carbon trading is included in 22 years, or the concentration of supply side is accelerated, 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.
From the perspective of growth, it is recommended that [ 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 and two wings injects new vitality into the company), [ Jiangxi Wannianqing Cement Co.Ltd(000789) ] (Jiangxi cement is the leader, with great regional infrastructure potential, and the current valuation of the company is relatively cheaper), Another recommendation is [ Anhui Conch Cement Company Limited(600585) ] (the national leader with both scale and cost advantages is expected to benefit the most after the implementation of carbon trading).
Risk tip: the demand for cement has fallen sharply, the price rise in peak season is less than expected, and the competition in aggregate industry has intensified.
