China Cement Sector Summary
Core Content
The document provides an analysis of the China cement sector, focusing on price trends, demand recovery, inventory levels, and stock performance in late March 2017. It also includes a valuation table for major cement companies and market share data based on clinker capacity across different regions.
Main Regions and Price Trends
- National Average Cement Price: Increased by 1% to RMB393/tonne compared to the previous week.
- Price Increases:
- Jiangsu, Zhejiang, Guangxi, Ningxia: RMB10-30/tonne increase.
- Xinjiang: RMB70/tonne increase.
- Price Decreases:
- Shiyan and Xiangyang, Hebei: RMB10-20/tonne decrease.
- Demand Recovery:
- Southern Region: Cement demand resumed normal levels.
- Northern Region: Shipments returned to 50-80% of normal levels.
- Northeast Region: Shipments resumed only 20-30% due to bad weather.
- Price Outlook:
- Southern Region: Expected to increase by RMB20-30/tonne in April.
- Overall: Prices are likely to pick up as peak season demand approaches.
Inventory Levels
- National Average Inventory Level: Dropped to 51.94%, indicating a tightening supply-demand balance.
Coal Price Trends
- Coal Prices: Relatively stable over the past two weeks.
- Bohai-Rim Steam Coal (Q5500K): Comprehensive average price index dropped slightly to RMB571/tonne last week, a 5.6% year-on-year decline.
Stock Performance
- Sector Performance:
- Strong: The sector showed strong share price performance.
- Best Performer: CNBM (3323.HK) increased 14.4% week-on-week after strong 2017 results.
- Weakest Performer: BBMG (2009.HK) lost 4.5% week-on-week.
- Average Stock Price Growth:
- Cement stocks under coverage: Increased by 4.8% on average last week.
Valuation Table
| Company |
Ticker |
Rating |
Price (HK$) |
Market Cap (US$m) |
PER(x) 2016 |
PER(x) 2017E |
PER(x) 2018E |
EV/EBITDA(x) 2016 |
EV/EBITDA(x) 2017E |
EV/EBITDA(x) 2018E |
Net Debt/Equity (%) |
| Conch Cement |
914 HK Equity |
BUY |
42.75 |
27,911 |
23.4 |
13.3 |
9.8 |
10.9 |
7.5 |
5.7 |
Net cash |
| ONBM |
3323 HK Equity |
BUY |
8.52 |
5,897 |
43.0 |
11.4 |
7.2 |
11.8 |
9.0 |
7.6 |
196 |
| BBMG |
2009 HK Equity |
BUY |
3.54 |
7,635 |
14.2 |
12.6 |
8.7 |
17.3 |
11.5 |
9.5 |
90 |
| CR Cement |
1313 HK Equity |
BUY |
6.78 |
5,679 |
23.6 |
12.4 |
7.8 |
10.8 |
7.8 |
5.6 |
39 |
| Simple Average |
|
|
|
|
26.1 |
12.0 |
8.4 |
12.1 |
8.5 |
6.8 |
106 |
| Weighted Average |
|
|
|
|
24.4 |
12.5 |
9.1 |
11.6 |
8.1 |
6.4 |
43 |
EPS Growth and Valuation Metrics
| Company |
EPS Growth (%) 2017E |
EPS Growth (%) 2018E |
CAGR (%) |
PEG(x) |
ROE (%) 2017E |
ROE (%) 2018E |
Dividend Yield (%) 2016 |
Dividend Yield (%) 2017E |
Dividend Yield (%) 2018E |
| Conch Cement |
72.1 |
32.9 |
|
11.48 |
11.48 |
17.49 |
20.12 |
1.3 |
3.3 |
| ONBM |
268.0 |
56.3 |
|
1.49 |
1.49 |
2.22 |
7.86 |
0.5 |
0.6 |
| CR Cement |
90.0 |
59.3 |
|
7.14 |
7.14 |
12.67 |
17.79 |
1.3 |
4.0 |
| BBMG |
9.4 |
42.8 |
|
5.64 |
5.64 |
5.32 |
6.87 |
1.7 |
1.9 |
| Simple Average |
114.3 |
43.0 |
|
6.44 |
6.44 |
9.72 |
13.33 |
1.2 |
2.4 |
| Weighted Average |
91.5 |
37.5 |
|
8.76 |
8.76 |
13.22 |
16.27 |
1.3 |
2.8 |
Regional Clinker Capacity Breakdown
| 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% |
0.0% |
0.0% |
0.0% |
14.6% |
| South Central China |
25.7% |
16.0% |
10.9% |
5.5% |
0.5% |
0.0% |
0.0% |
7.8% |
2.4% |
| North China |
0.0% |
5.4% |
2.0% |
5.8% |
30.4% |
0.0% |
0.0% |
0.0% |
1.9% |
| Northeast China |
0.0% |
7.6% |
0.0% |
18.1% |
6.6% |
0.0% |
0.0% |
0.0% |
0.0% |
| Southwest China |
11.7% |
25.1% |
1.6% |
2.9% |
5.6% |
0.9% |
1.0% |
2.8% |
4.7% |
| Northwest China |
7.5% |
0.0% |
0.0% |
0.7% |
6.0% |
0.0% |
0.3% |
0.0% |
26.6% |
| Grand Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
Regional Market Share in Clinker Capacity (2017)
| Region |
Anhui Conch |
CNBM |
CR Cement |
Shanshui |
BBMG |
Asia Cement |
WCC |
Huaxin-Lafarge |
Sinoma Group |
| East China |
20.0% |
25.7% |
1.5% |
5.5% |
0.5% |
0.0% |
0.0% |
0.0% |
2.7% |
| South Central China |
11.6% |
10.3% |
10.9% |
0.3% |
0.7% |
2.2% |
0.0% |
7.8% |
2.4% |
| North China |
0.0% |
6.7% |
2.0% |
5.8% |
30.4% |
0.0% |
0.0% |
0.0% |
1.9% |
| Northeast China |
0.0% |
22.3% |
0.0% |
9.4% |
6.7% |
0.0% |
0.0% |
0.0% |
0.0% |
| Southwest China |
7.5% |
0.0% |
3.6% |
2.9% |
5.6% |
0.9% |
1.0% |
2.8% |
4.7% |
Analyst Information
- Wong Chi Man – Head of Research
- Mark Lau – Research Analyst
Disclaimer and Disclosure
- This report is not directed at individuals or entities in jurisdictions where it would be illegal to distribute or use.
- No warranty is given regarding the accuracy or completeness of the information.
- China Galaxy International may have financial interests in the companies mentioned, and conflicts of interest may exist.
- The analyst certifies that the views expressed are personal and not necessarily aligned with the firm's published views.
- The report is not an offer to buy or sell securities. Past performance is not indicative of future results.
