20180205-中国银河国际证券-Off-peak_Production_Suspensions_Becomes_a_Longer-Term_Measure__Unexciting_Cement_Prices_Before_CNY_12页_721kb

China Cement Weekly Summary - February 05, 2018

Core Content Overview

The China Cement Weekly report for February 05, 2018 provides an analysis of the cement sector's performance, including price trends, production suspensions, inventory levels, and stock market data. It highlights the impact of seasonal factors and policy measures on the industry.

Key Market Trends

• Cement Prices:

  • National cement prices fell by 0.4% week-on-week to RMB398/tonne.
  • Regional price declines ranged from RMB20-30/tonne in Shanghai, Jiangxi, Jiangsu, Zhejiang, Henan, and Chongqing.
  • The Inner Mongolia region saw an increase of RMB20-30/tonne.
  • CNY (Chinese New Year) is expected to suppress demand, leading to stable prices in the short term, with potential price reductions post-CNY in high-price areas to stimulate demand.

• Inventory Levels:

  • The average national inventory level rebounded to 57.31%.

• Coal Prices:

  • Bohai-Rim Steam Coal (Q5500K) prices remained stable at RMB577/tonne.
  • A year-on-year decline of 2.2% was recorded.

Production Suspensions

• Off-peak production suspensions are becoming a longer-term strategy.
• Jiangxi has announced that such suspensions will be implemented for at least 55 days annually between 2018 and 2020, primarily during CNY, hot seasons, and high-pollution periods.
• This indicates a shift towards sustainable supply discipline and regulatory control.

Stock Performance

• Cement stocks under coverage increased by 0.4% on average.
• Share price performance was mixed:
  • CNBM (3323.HK) was the best performer, rising 3.1%.
  • BBMG (2009.HK) was the weakest, falling 3.5%.

Valuation Table

Peer Comparison

Regional Cement Price Trends

• Regional cement prices showed varied trends, with some regions experiencing declines and others increases.
• The Inner Mongolia region had the highest price increase, while Shanghai and Jiangxi had notable declines.
• The report includes charts and figures for cement prices in different regions and cities, highlighting the price fluctuations.

Clinker Capacity Breakdown

• The clinker capacity distribution across different regions and provinces is detailed.
• Anhui Conch (0914.HK) and CNBM (3323.HK) are major players in several regions.
• Jiangxi and Shandong have significant shares in the cement market.
• The Grand Total for clinker capacity is 100%, with Anhui Conch and CNBM leading in certain provinces and regions.

Analyst Notes

• The report is authored by Wong Chi Man, Head of Research.
• The equity ratings are defined as:
  • BUY: Expected share price increase >20% in 12 months.
  • HOLD: No clear catalyst, with no clear direction.
  • SELL: Expected share price decrease >20% in 12 months.
• The report includes disclaimer and disclosure statements regarding potential financial interests and conflicts of interest.

Disclaimer and Disclosure

• The report is issued by Galaxy International Securities and is not intended for distribution in jurisdictions where it would be illegal.
• The company may have financial interests in the securities covered, with holdings potentially equal to or exceeding 1% of market capitalization.
• Directors, officers, and employees may have roles in the mentioned companies.
• The report may involve investment banking services, and the analyst has no direct financial interest in the listed companies.

Summary of Key Points

• Cement prices continued to decline due to weak demand and the approaching CNY holiday.
• Off-peak production suspensions are becoming a longer-term measure.
• Inventory levels showed a moderate rebound.
• Stock performance was mixed, with CNBM performing well and BBMG underperforming.
• The report includes valuation metrics, peer comparisons, and clinker capacity breakdowns.
• Analyst certification and disclaimer are included to ensure transparency and compliance.