20181119-中国银河国际证券-China_Cement_Weekly_12页_8mb

China Cement Weekly Summary - November 19, 2018

Core Content Overview

This report provides an analysis of the cement sector in China, focusing on price trends, inventory levels, and stock performance across various regions and companies. It also includes valuation data and market share information.

Key Market Trends

• Cement Prices:
  The average cement price nationwide increased by 0.7% to RMB442/tonne from the previous week.

  • In Zhejiang, Anhui, Fujian, and Henan, prices rose by RMB20–60/tonne.
  • In Bengdu, Huaian (Anhui), and Zunyi (Guizhou), prices fell by RMB20–60/tonne.
  • Despite rainy weather in some areas, prices remained high due to low inventory levels and strong demand from construction projects.
  • The price drop in northern Anhui was attributed to temporary environmental restrictions (November 8–13), which led to a suspension of construction activities.
  • Although the price cut occurred, the factory price in northern Anhui still stood at RMB500/tonne, which is high compared to previous years.
  • The report suggests that this price cut is a short-term issue and should not affect other regions in eastern China.

• Inventory Levels:
  The average cement inventory level nationwide dropped from 48.31% to 48.25% week on week, indicating tight supply and strong demand.

Stock Performance

• Cement stocks under coverage increased by 0.4% on average last week.
• BBMG (2009.HK) was the best performer, rising by 7.11%.
• Conch Cement (914.HK) was the weakest performer, falling by 2.53% week on week.
• The report highlights valuation metrics for the covered companies, including PER (Price to Earnings Ratio) and EV/EBITDA (Enterprise Value to EBITDA).

Valuation Table Highlights

Regional Cement Price Overview

• The report includes regional cement price data for East China, South Central China, North China, Northeast China, Southwest China, and Northwest China.
• Northern Anhui saw a price drop due to environmental restrictions, but this is expected to be short-term and not impact other regions.
• Mid-November cement prices remained high across most regions, with Anhui, Zhejiang, and Henan showing price increases.

Market Share by Region (2017)

• East China:
  • Anhui Conch had the largest market share at 38.4%.
  • CNBM had 5.3%.
• South Central China:
  • Sichuan had the largest share at 4.2%.
  • Guizhou had 9.0%.
• North China:
  • CNBM had 5.4%.
• Northeast China:
  • CNBM had 22.3%.
• Southwest China:
  • CNBM had 23.0%.
• Northwest China:
  • CNBM had 15.3%.
• Grand Total:
  • The market share across all regions totaled 100.0%.

Analyst Notes

• Wong Chi Man (Head of Research) and Mark Lau (Research Analyst) are the authors of this report.
• The report is intended for institutional clients and not for public distribution.
• No guarantees are made regarding future performance, and past performance is not indicative of future results.
• The report is subject to change and disclaimer applies to any inaccuracies or omissions.

Equity Rating Explanation

• BUY: Indicates that the share price is expected to increase by more than 20% within 12 months.
• SELL: Indicates that the share price is expected to decrease by more than 20% within 12 months.
• HOLD: Indicates no clear catalyst and downgraded from BUY pending further information.

Disclaimer and Disclosure

• This report is not intended for public distribution and is issued to institutional clients.
• China Galaxy International Securities may have financial interests in the companies mentioned.
• Analysts confirm that their views reflect personal opinions and are not influenced by compensation.
• The report does not constitute an offer to buy or sell any securities.
• No warranties are made regarding the accuracy or completeness of the information provided.