20170213-中国银河国际证券-China_Cement_Weekly_12页_952kb

China Cement Weekly Summary - February 13, 2017

Core Content Overview

The China Cement Weekly report from February 13, 2017, provides an analysis of the cement sector in China, including price trends, inventory levels, and company performance metrics. It also includes insights on the sector's profitability, stock market performance, and regional breakdowns of cement production and market share.

Main Points and Key Information

Cement Price Trends

• Cement prices declined 0.8% week-on-week to RMB 313.42/tonne nationwide.
• Prices in Fujian, Shanghai, Jiangsu, Zhejiang, and Jiangxi dropped by RMB10-30/tonne.
• Prices in Henan fell by RMB50/tonne, as they were unusually high before the Lunar New Year.
• The decline is expected to stimulate demand after the holiday period.
• Market demand remained relatively muted in the first week post-holidays, with east, south central, and southwest China showing some recovery in bulk cement demand.

Inventory Levels

• National cement inventory climbed slightly to 60.38%, still considered very low.
• Inventory levels around the traditional slack season were lower than usual, with the national inventory level at ~60% during the Chinese New Year, compared to ~70% in the past five years.

Profitability

• The cement industry profit increased by 55% in 2016 to RMB51.8bn, driven by low base effect and price rises due to industry coordination.
• Industry revenue rose 1.2% to RMB876.4bn in 2016.
• The report expects profitability to continue improving in 2017 due to well-controlled average selling prices (ASP) and low inventory levels.

Price Trends in 2017

• National ASP in January 2017 reached RMB317/tonne, a 32.5% YoY increase.
• The cement sector as a whole gained 29% year to date, suggesting potential profit-taking in the near term.

Cement Stock Performance

Market Sentiment

• Market sentiment was upbeat in the first week after the Lunar New Year.
• CNBM was the best performer, rising 10.9%.
• CR Cement, the weakest stock, also rose 4.4%.

Valuation and Performance Metrics

EPS Growth and PEG

Regional Cement Price Analysis

• The report includes Figure 1: Regional Cement Price, which illustrates price trends across different regions.
• East China: Anhui Conch dominates with a significant share.
• South Central China: CR Cement shows strong performance.
• North China: ONBM and BBMG are notable.
• Southwest China: Sichuan and Guizhou have significant market shares.
• Northwest China: BBMG and others have notable presence.

Regional Clinker Capacity Breakdown (2015)

• East China: Anhui Conch (44.9%), CNBM (40.2%), CR Cement (10.9%), Shanshui (51.7%), BBMG (2.2%).
• South Central China: Guangdong (26.5%), Guangxi (15.4%), Hunan (11.8%), Hubei (11.8%), Henan (11.8%).
• North China: Inner Mongolia (100.0%), Hebei (48.0%), Shanxi (17.2%), Shaanxi (80.3%), Qinghai (14.6%).
• Northeast China: Heilongjiang (57.9%), Jilin (23.5%), Liaoning (4.5%).
• Southwest China: Chongqing (11.2%), Sichuan (7.5%), Guizhou (21.4%), Yunnan (6.5%), Tibet (0.0%).

Market Share in Terms of Clinker Capacity (2015)

• East China: Anhui Conch (53.2%), CNBM (11.4%), BBMG (0.4%), others (2.5%).
• South Central China: CR Cement (19.1%), CNBM (10.3%), others (10.7%).
• North China: CNBM (29.1%), others (29.3%).
• Northeast China: CNBM (20.7%), others (11.5%).
• Southwest China: CNBM (26.7%), others (11.2%).

Analysts and Contact Information

• Wong Chi Man – Head of Research
  • Email: cmwong@chinastock.com.hk
  • Phone: (852) 3698-6317
• Livy Lyu – Research Assistant
  • Email: lvylyu@chinastock.com.hk
  • Phone: (852) 3698-6393

Disclaimer

• This report is not directed at any person or entity in jurisdictions where distribution would be illegal.
• No guarantees are made regarding accuracy or completeness.
• Past performance does not indicate future results.
• The report is for institutional clients only.

Conflict of Interest Disclosure

• China Galaxy Securities (6881.HK) is a holding company of China Galaxy International Securities (HK).
• The firm may have financial interests in the companies mentioned.
• Directors, officers, and employees may hold positions in the mentioned companies.
• The firm may participate in financing transactions, provide services, or seek investment mandates from the companies discussed.

Analyst Certification

• The analyst certifies that the views expressed accurately reflect personal views.
• The views may not align with those of China Galaxy International or its subsidiaries.