20160704-中国银河国际证券-China_Cement_Weekly_12页_1mb

报告摘要

China Cement Weekly Summary - July 4, 2016

Core Content

The China Cement Weekly report dated July 4, 2016, provides an overview of the cement sector, including price trends, market sentiment, stock performance, and valuation metrics. It also highlights key developments such as the cancellation of a major acquisition and regional market share analysis.

Main Points

1. Cement Price Trends

Cement prices continued to decline slightly, with the national average price falling by 0.19% week-on-week to RMB254.92/tonne.
Prices in Anhui, Guangxi, and Yunnan dropped by RMB5-10/tonne.
Daily shipment volume remained around 60%, indicating weak market demand.
Average inventory level increased to 72%, suggesting over-supply in the market.

2. Coal Price Trends

Bohai-Rim Steam Coal (Q5500K) prices rose slightly by RMB1/tonne to RMB401/tonne.
The index was 4.0% lower on a year-on-year basis, reflecting continued downward pressure.

3. Acquisition Cancellation

Anhui Conch (0914.HK) terminated its acquisition of West China Cement (2233.HK) due to inability to secure necessary approvals.
Originally, Anhui Conch was set to increase its stake from 21.2% to 51.6%, which would have triggered a general offer of HK$1.69 per share.
Despite a 33% drop in West China Cement's share price before the announcement, the report suggests that the current 0.8x PBR is unsustainable, with a potential price range of 0.5-0.6x PBR or HK$0.63-0.76 per share, implying a 29%-41% downside.

4. Stock Performance

Cement stocks under coverage rose on average by 3.3% last week.
Anhui Conch (0914.HK) was the best performer, up 5.6%.
BBMG (2009.HK) was the weakest, with only 1.3% increase in price.

Key Information

Valuation Table (2015-2017E)

Company	Ticker	Rating	Price (HK$)	Market Cap (US$m)	PER (2015)	PER (2016E)	PER (2017E)	PBR (2015)	PBR (2016E)	PBR (2017E)	EV/EBITDA (2015E)	EV/EBITDA (2016E)	EV/EBITDA (2017E)	Net Debt/Equity (%)
Anhui Conch	914 HK Equity	BUY	18.62	11,807	13.1	9.4	9.4	1.20	1.09	1.01	7.0	5.4	5.1	3
ONBM	3323 HK Equity	HOLD	3.38	2,340	25.3	6.4	6.5	0.39	0.37	0.35	9.9	9.5	9.3	218
BBMG	2009 HK Equity	BUY	2.31	5,529	11.4	7.7	7.2	0.56	0.55	0.52	8.6	7.3	6.8	63
CR Cement	1313 HK Equity	HOLD	2.48	2,077	7.4	10.2	10.3	0.57	0.55	0.54	7.4	6.6	6.7	64
Simple Average	-	-	-	-	14.3	8.4	8.3	0.68	0.64	0.61	8.2	7.2	7.0	2.4
Weighted Average	-	-	-	-	13.4	8.7	8.6	0.89	0.83	0.77	7.8	6.4	6.1	47

Peer Comparison

Company	Ticker	Rating	Market Cap (US$m)	PER (2015)	PER (2016E)	PER (2017E)	PBR (2015)	PBR (2016E)	PBR (2017E)	EV/EBITDA (2015E)	EV/EBITDA (2016E)	EV/EBITDA (2017E)
Anhui Conch	914 HK Equity	BUY	11,807	13.1	9.4	9.4	1.20	1.09	1.01	7.0	5.4	5.1
CNBM	3323 HK Equity	HOLD	2,340	25.3	6.4	6.5	0.39	0.37	0.35	9.9	9.5	9.3
BBMG	2009 HK Equity	BUY	5,529	11.4	7.7	7.2	0.56	0.55	0.52	8.6	7.3	6.8
CR Cement	1313 HK Equity	HOLD	2,077	7.4	10.2	10.3	0.57	0.55	0.54	7.4	6.6	6.7
Simple Average	-	-	-	4.3	6.9	16.7	0.46	0.54	0.52	7.8	8.2	8.2
Weighted Average	-	-	-	12.3	8.2	9.5	0.84	0.77	0.72	7.8	6.5	6.5

Regional Cement Price and Inventory Overview

Regional Cement Price (Figure 1)

Prices in various regions were affected by rainy weather, which weakened end-demand.
Anhui Conch and West China Cement had notable price drops in certain areas.

Cement Inventory Level (Figure 7)

National average inventory level climbed to 72%, indicating a significant oversupply in the market.

Regional Clinker Capacity Breakdown (2015)

Region	Anhui Conch	CNBM	CR Cement	Shanshui	BBMG	TCCI	Asia Cement	WCC	Sinoma Group	Jidong	Huaxin
East China	44.8%	31.3%	11.6%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
South Central China	26.4%	14.9%	9.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
North China	5.0%	7.7%	23.1%	92.9%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%	0.0%
Northeast China	7.1%	0.0%	19.9%	2.4%	3.4%	0.0%	0.0%	0.0%	8.5%	0.0%	0.0%
Northwest China	0.0%	0.0%	2.6%	0.0%	0.0%	0.0%	94.5%	60.4%	18.5%	0.0%	100.0%
Grand Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

Market Share in Terms of Clinker Capacity (2015)

Region	Anhui Conch	CNBM	CR Cement	Shanshui	BBMG	TCCI	Asia Cement	WCC	Sinoma Group	Jidong	Huaxin
East China	17.7%	25.4%	1.4%	6.2%	0.0%	0.8%	1.8%	0.0%	3.0%	0.4%	0.0%
South Central China	12.1%	10.6%	10.1%	0.4%	0.4%	5.2%	1.2%	0.0%	1.6%	0.4%	8.2%
North China	0.0%	0.0%	7.7%	64.4%	11.6%	0.0%	0.0%	0.0%	10.2%	0.0%	0.0%
Northeast China	0.0%	0.0%	19.9%	2.4%	3.4%	0.0%	0.0%	0.0%	8.5%	0.0%	0.0%
Northwest China	8.7%	0.0%	0.0%	0.0%	0.0%	0.0%	94.5%	60.4%	18.5%	0.0%	100.0%
Grand Total	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

Conclusion

The cement sector in China faced continued price declines and weak demand, primarily due to rainfall and seasonal factors. The Anhui Conch acquisition of West China Cement was terminated, impacting the latter's stock valuation. The market sentiment showed recovery after a Brexit correction, with Anhui Conch performing best. The report also highlights regional disparities in cement prices and market share distribution, with Anhui Conch and CR Cement dominating in East China, while Asia Cement and WCC have significant presence in Northwest China.