20180326-中国银河国际证券-China_Cement_Weekly_Cement_Prices_Continued_to_Rebound__Inventory_Maintained_at_a_Healthy_Level_12页_716kb

China Cement Sector Summary

Core Content

The document provides an analysis of the China cement sector, focusing on price trends, inventory levels, and stock performance. It also includes a breakdown of clinker capacity distribution across different regions and a market share table for key cement companies in China.

Cement Price Trends

• National average cement prices increased by 1% last week, reaching RMB386/tonne.
• Main regions with price increases:
  • Inner Mongolia: RMB10–90/tonne
  • Tianjin: RMB10–90/tonne
  • Yunnan: RMB10–90/tonne
  • Zhejiang: clinker price increased by RMB20/tonne
• Main regions with slight declines:
  • Nanjing: RMB10/tonne
  • Maanshan: RMB10/tonne
• Demand recovery:
  • Cement demand continued to recover in mid-March.
  • Most regions resumed normal shipment levels, while a few reached 80% of normal levels.
  • North and northwest China saw 40–70% of normal shipment levels.
• Inventory support:
  • Low inventory levels supported price rebounds.
  • National average inventory level dropped to 55.19%.

Stock Performance

• Weak market sentiment affected the cement sector due to trade war concerns between China and the US.
• Cement stocks under coverage fell by 7.4% on average last week.
• Individual stock performance:
  • CR Cement (1313.HK): dropped 5.3% week-on-week
  • CNBM (3323.HK): lost 11.1% week-on-week (weakest performer)
  • Onch Cement (914 HK Equity): dropped 5.3%
  • BBMG (2009 HK Equity): dropped 11.1%
• Rating:
  • BUY for most listed companies
  • CNBM and BBMG are noted as the weakest performers

Valuation Table Highlights

• Simple average PER(x): 11.5 (2017E), 8.3 (2018E)
• Simple average EV/EBITDA(x): 11.8 (2016), 8.3 (2017E), 6.8 (2018E)
• Weighted average PER(x): 12.2 (2017E), 8.9 (2018E)
• Weighted average EV/EBITDA(x): 11.3 (2017E), 7.8 (2018E)

Regional Cement Price Analysis

• Figure 1 shows regional cement price changes.
• Figure 2–5 include cement prices in major cities (with visual representations).
• Figure 6 provides cement prices in late March (RMB/tonne).
• Figure 7 shows inventory levels by region.
• Figure 8 illustrates clinker capacity breakdown by region (2017).
• Figure 9 presents market share in terms of clinker capacity (2017).

Market Share and Clinker Capacity

• East China:
  • Anhui Conch (0914.HK): 46.2%
  • CNBM (3323.HK): 41.3%
  • CR Cement (1313.HK): 10.6%
  • Shanshui (0691.HK): 49.6%
• South Central China:
  • CNBM (3323.HK): 25.7%
  • CR Cement (1313.HK): 16.0%
  • Shanshui (0691.HK): 10.9%
  • Asia Cement (0743.HK): 2.2%
• North China:
  • CNBM (3323.HK): 5.4%
  • Shanshui (0691.HK): 15.1%
  • BBMG (2009.HK): 10.6%
• Northeast China:
  • CNBM (3323.HK): 22.3%
  • Shanshui (0691.HK): 9.4%
• Southwest China:
  • CNBM (3323.HK): 29.8%
  • Shanshui (0691.HK): 11.7%
• Northwest China:
  • BBMG (2009.HK): 26.6%
  • Shanshui (0691.HK): 48.6%

Analysts and Contact Information

• Wong Chi Man – Head of Research
  • Email: cmwong@chinastock.com.hk
  • Phone: (852) 3698-6317
• Mark Lau – Research Analyst
  • Email: marklau@chinastock.com.hk
  • Phone: (852) 3698-6393

Disclaimer and Disclosure

• The report is not for distribution in jurisdictions where it would be unlawful.
• The report is issued by Galaxy International Securities and is based on reliable information sources.
• No warranties or guarantees are made regarding the accuracy or completeness of the data.
• China Galaxy International may have financial interests in the companies mentioned.
• Analyst certification confirms that the views in the report reflect personal opinions and are not influenced by compensation.

Equity Rating Explanation

• BUY: Expected share price increase of >20% within 12 months.
• SELL: Expected share price decrease of >20% within 12 months.
• HOLD: No clear catalyst, and downgraded from BUY pending clearer signals.

Copyright

• No part of this material may be reproduced or redistributed without prior written consent from China Galaxy International Securities (Hong Kong) Co., Limited.