China Cement Sector Summary
Core Content
The document provides an overview of the recent trends and analysis in the China cement sector, focusing on price movements, environmental inspections, stock performance, and valuation metrics. It outlines the market dynamics across different regions and the financial standing of major cement companies.
Cement Price Trends
- National Average Cement Price: The average cement price nationwide decreased slightly by 0.12% to RMB415/tonne compared to the previous week.
- Regional Price Movements:
- Price Increases: Major regions with increases included Baotou (Inner Mongolia), Liaoning, and Shandong, with price hikes ranging from RMB30-100/tonne.
- Price Decreases: Declines were observed in Hengyang (Hunan), Guizhou, and certain regions in Xinjiang, with decreases of RMB20-60/tonne.
- Demand Stability: Cement demand remained largely stable in late May, with potential slight drops in some areas due to rainy weather.
- Inventory Level: The average inventory level (nationwide) remained at 54%.
Environmental Protection Inspections
- New Inspections: The Ministry of Ecology and Environment has announced the start of a new round of environmental protection inspections.
- Purpose: These inspections aim to assess progress on environmental improvements identified in previous inspections.
- Impact: Effective implementation is expected to help control overcapacity in various industries, including the cement sector.
Stock Performance
- Sector Performance: Cement stocks under coverage experienced an average drop of 0.4% last week.
- Best Performer: CR Cement [1313.HK; BUY] recorded a week-on-week increase of 6.1%.
- Weakest Performer: Conch Cement [0914.HK; BUY] fell 3.9% week-on-week.
Valuation Table
| Company |
Ticker |
Rating |
Price (HK$) |
Market Cap (US$m) |
PER (x) 2017 |
PER (x) 2018E |
PER (x) 2019E |
EV/EBITDA (x) 2017 |
EV/EBITDA (x) 2018E |
EV/EBITDA (x) 2019E |
Net Debt/Equity (%) |
| Conch Cement |
914 HK Equity |
BUY |
47.30 |
29,322 |
14.7 |
9.4 |
9.3 |
8.3 |
5.6 |
5.6 |
8.3 |
| ONBM |
3323 HK Equity |
BUY |
9.02 |
7,388 |
12.1 |
7.0 |
6.9 |
9.1 |
7.4 |
7.5 |
169 |
| BBMG |
2009 HK Equity |
BUY |
3.57 |
6,639 |
12.7 |
8.7 |
8.1 |
11.6 |
9.4 |
8.7 |
95 |
| CR Cement |
1313 HK Equity |
BUY |
9.17 |
7,680 |
16.8 |
8.0 |
7.9 |
9.9 |
5.7 |
5.7 |
16 |
| Simple Average |
|
|
|
|
14.1 |
8.3 |
8.1 |
9.7 |
7.0 |
6.9 |
93 |
| Weighted Average |
|
|
|
|
14.4 |
8.7 |
8.6 |
9.1 |
6.4 |
6.3 |
39 |
EPS Growth and Valuation Metrics
| Company |
Ticker |
EPS Growth 2018E (%) |
EPS Growth 2019E (%) |
CAGR (%) |
PEG (x) |
ROE (%) 2017 |
ROE (%) 2018E |
ROE (%) 2019E |
Dividend Yield (%) 2017 |
Dividend Yield (%) 2018E |
Dividend Yield (%) 2019E |
| Conch Cement |
914 HK Equity |
54.0 |
0.5 |
24.4 |
0.4 |
17.49 |
22.94 |
20.12 |
3.0 |
4.8 |
5.4 |
| CNBM |
3323 HK Equity |
69.3 |
1.2 |
30.9 |
0.2 |
7.86 |
12.10 |
11.10 |
1.3 |
2.9 |
2.9 |
| CR Cement |
1313 HK Equity |
110.7 |
0.4 |
45.4 |
0.2 |
12.67 |
26.69 |
23.10 |
2.9 |
6.4 |
6.3 |
| BBM/G |
2009 HK Equity |
44.2 |
7.1 |
24.2 |
0.3 |
5.32 |
6.93 |
7.00 |
1.9 |
2.5 |
2.7 |
| Simple Average |
|
69.5 |
2.3 |
31.2 |
0.3 |
10.83 |
17.17 |
15.33 |
2.3 |
4.1 |
4.3 |
| Weighted Average |
|
63.5 |
1.4 |
28.5 |
0.3 |
13.79 |
19.86 |
17.56 |
2.6 |
4.5 |
4.8 |
Peer Comparison
| Company |
Ticker |
Market Cap (US$m) |
PER (x) 2017 |
PER (x) 2018E |
PER (x) 2019E |
PBR (x) 2017 |
PBR (x) 2018E |
PBR (x) 2019E |
EV/EBITDA (x) 2017 |
EV/EBITDA (x) 2018E |
EV/EBITDA (x) 2019E |
| Conch Cement |
914 HK Equity |
29,322 |
14.7 |
9.4 |
9.3 |
2.38 |
1.99 |
1.78 |
8.3 |
5.6 |
5.6 |
| CNBM |
3323 HK Equity |
7,388 |
12.1 |
7.0 |
6.9 |
0.91 |
0.80 |
0.74 |
9.1 |
7.4 |
7.5 |
| BBMG |
2009 HK Equity |
6,639 |
12.7 |
8.7 |
8.1 |
0.66 |
0.58 |
0.55 |
11.6 |
9.4 |
8.7 |
| CR Cement |
1313 HK Equity |
7,680 |
16.8 |
8.0 |
7.9 |
1.98 |
1.71 |
1.54 |
9.9 |
5.7 |
5.7 |
| Asia Cement |
743 HK Equity |
994 |
6.4 |
4.3 |
4.1 |
0.62 |
0.55 |
0.50 |
4.8 |
3.4 |
3.5 |
| West China Cement |
2233 HK Equity |
1,017 |
9.1 |
5.9 |
5.3 |
0.98 |
0.81 |
0.74 |
4.7 |
3.5 |
3.5 |
| Tianrui Cement |
1252 HK Equity |
2,430 |
13.9 |
n.a. |
n.a. |
1.57 |
n.a. |
n.a. |
8.7 |
n.a. |
n.a. |
Market Share by Clinker Capacity (2017)
| Region |
Anhui Conch |
CNBM |
CR Cement |
Shanshui |
BBMG |
Asia Cement |
WCC |
Huaxin-Lafarge |
Sinoma Group |
| East China |
46.2% |
41.3% |
10.6% |
49.6% |
2.2% |
58.5% |
0.0% |
0.0% |
5.3% |
| South Central China |
25.7% |
16.0% |
74.1% |
2.7% |
0.7% |
2.2% |
0.0% |
7.8% |
2.4% |
| North China |
100.0% |
100.0% |
100.0% |
100.0% |
30.4% |
2.0% |
0.0% |
2.8% |
4.7% |
| Northeast China |
11.1% |
16.0% |
3.6% |
2.9% |
5.6% |
0.9% |
1.0% |
2.8% |
4.7% |
| Southwest China |
7.5% |
0.0% |
0.0% |
0.7% |
6.0% |
0.0% |
8.2% |
2.8% |
4.7% |
| Northwest China |
7.5% |
0.0% |
0.0% |
0.0% |
8.2% |
0.3% |
2.8% |
2.8% |
4.7% |
| Grand Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
Analyst Information
- Wong Chi Man – Head of Research
- Mark Lau – Research Analyst
Disclaimer
- The report is issued by China Galaxy International Securities (Hong Kong) Co., Limited.
- It is not directed at, or intended for distribution to, any person or entity in jurisdictions where it would be illegal to distribute or use.
- The report is based on reliable sources, but no guarantees are made regarding accuracy or completeness.
- The report does not constitute an offer or solicitation to buy or sell any securities.
- Past performance is not indicative of future results.
Equity Rating Explanation
- BUY: Share price is expected to increase by >20% within 12 months.
- SELL: Share price is expected to decrease by >20% within 12 months.
- HOLD: No clear catalyst; downgraded from BUY pending further signals.
Copyright
- No part of this material may be reproduced or redistributed without the prior written consent of China Galaxy International Securities (Hong Kong) Co., Limited.
