20131111-中国银河国际证券-Decoupling_between_Cement_Prices_and_Share_Prices_Continued_12页_922kb

报告摘要

China Cement Sector Summary

Core Content

The China cement sector continues to show a decoupling between cement prices and share prices. Despite a rise in cement prices, the stock performance of cement companies has remained range-bound, indicating that the market is not fully reacting to the price increases. The document highlights key trends in cement pricing, company valuations, and market share across different regions of China.

Main Points

Cement Price Trends: Cement prices increased by 1.8% last week, with notable price hikes in Jiangxi, Fujian, Guangdong, and Hainan. Prices in these regions rose by RMB20-50/tonne. The average national cement price was RMB347/tonne.
CR Cement Performance: Cement prices in Fuzhou (Fujian) increased by RMB20-30/tonne, and prices in the Pearl River Delta rose by RMB30/tonne due to high transportation costs from the low water level in the Xijiang River. These price increases are expected to positively impact CR Cement's earnings for 2013, as Fujian and Guangdong account for nearly half of its cement segment revenue.
Share Price Performance: Cement stocks under coverage fell 3% last week, slightly worse than the HSCEI which dropped 2.7%. CR Cement was the best performer, falling only 1%, while big-cap cement stocks like Anhui Conch and CNBM declined by 3.7% and 3.6%, respectively.
Valuation Metrics: The valuation table provides PER, PBR, and EV/EBITDA ratios for various cement companies. Anhui Conch is rated BUY, with a weighted average PER of 13.5 and PBR of 1.6. CR Cement is also rated BUY, with a weighted average PER of 13.5 and PBR of 1.6.
EPS Growth and PEG: The EPS growth for 2013E and 2014E is highlighted. Anhui Conch shows strong growth with 34.3% and 15.2%, respectively. CR Cement also shows good growth with 28.8% and 21.5%. The weighted average PEG is 0.5, suggesting reasonable valuation.
Market Share: The market share in terms of clinker capacity is detailed. Anhui Conch leads in East China, while CNBM and CR Cement have significant shares in South Central China and Guangxi, respectively. Asia Cement dominates in Southwest China.
Regional Analysis: The document includes a breakdown of cement price trends across different regions. East China and South Central China show more pronounced price increases compared to North China. Northeast China and Northwest China have lower price movements.
Investor Recommendation: The report suggests that investors with a shorter investment horizon should consider trimming positions if cement stock prices do not react to the strong price momentum in the coming weeks. Anhui Conch and CR Cement are still preferred due to their favourable supply-demand balance.
Analyst Certification: The analyst certifies that the views expressed are based on personal analysis and not influenced by compensation or trading activities related to the stocks covered.

Key Information

Cement Price Momentum: Strong in Jiangxi, Fujian, Guangdong, and Hainan, with Guangxi affected by transportation costs.
Share Price Weakness: Despite rising cement prices, cement stocks have been weak, with CR Cement being the best performer.
Valuation Insight: Anhui Conch and CR Cement are rated BUY, while CNBM is rated HOLD.
Investment Strategy: Investors should consider trimming positions if the market does not react to price momentum, especially due to potential price weakening in Q1.
Regional Market Share: Highlighted in the table, with Anhui Conch leading in East China, CNBM in South Central China, and Asia Cement in Southwest China.
Future Outlook: The report anticipates cement price weakness in Q1 due to Lunar New Year holidays and winter weather in North China.

Summary Table

Company	Ticker	Rating	Price (HK$)	Market Cap (US$m)	EPS Growth (2013E)	EPS Growth (2014E)	PEG	ROE (2013E)	Dividend Yield (2013E)	Dividend Yield (2014E)
Anhui Conch	914 HK Equity	BUY	25.95	14,161	34.3	15.2	0.5	13.5	16.2	16.3
CNBM	3323 HK Equity	HOLD	7.45	5,157	8.0	12.4	0.5	19.1	17.7	17.2
CR Cement	1313 HK Equity	BUY	5.15	4,313	28.8	21.5	0.4	11.4	13.3	14.4
BBMG	2009 HK Equity	BUY	5.33	3,681	11.0	9.6	0.8	9.9	9.8	9.8
Shanshui Cement	691 HK Equity	HOLD	2.75	993	(36.8)	5.6	(0.4)	18.4	10.7	10.7
Simple Average					9.1	12.9	0.4	14.5	13.6	13.7
Weighted Average					23.2	14.6	0.5	13.9	15.0	15.1

Conclusion

The China cement sector is experiencing price increases in several key regions, which could support earnings for 2013, particularly for CR Cement and Anhui Conch. However, share prices have not fully reflected these gains, leading to a range-bound market. The Q4 rally pattern appears to be well anticipated, which may have contributed to the current market sentiment. Investors are advised to monitor the price momentum and consider trimming positions if the market does not respond positively. Anhui Conch and CR Cement remain preferred due to their strong fundamentals and favourable supply-demand balance.