20171211-中国银河国际证券-China_Cement_Weekly__Cement_Price_Momentum_Accelerates__Guizhou_Au_thorities_Pay_Attention_toSurging_Cement_Prices__12页_885kb

China Cement Sector Summary

Core Content

The document provides an analysis of the recent trends in the China cement sector, focusing on price increases, supply conditions, and the impact on the stock market. It also includes a valuation table, peer comparison, and market share breakdown across various regions.

Key Highlights

Cement Price Trends

• National Cement Price Increase: The average cement price nationwide rose by 6% week-on-week to RMB 398/tonne.
• Regional Variations:
  • East China saw the largest price increase, with prices exceeding RMB 500/tonne due to tight supply.
  • South Central China and Southwest China also experienced significant price increases, though less than in the east.
  • North China had low cement and clinker supply due to off-peak production suspensions.
  • South China had moderate price increases, but there is potential for it to catch up with the east.
• Inventory Levels: The national average cement inventory level fell to 51.94%, a multi-year low, indicating tight supply conditions.

Coal Price Stability

• Coal Prices: The comprehensive average price index for Bohai-Rim Steam Coal (Q5500K) remained stable at RMB 576/tonne.
• Year-on-Year Change: The index was down 3.7% YoY.

Regulatory Attention

• Guizhou DRC: The Guizhou Development and Reform Commission (DRC) held a meeting to remind major cement producers of the importance of fair market competition and anti-trust laws due to recent price surges.
• Price Comparison: The latest cement prices in Guizhou were similar to 2013 levels, which are relatively moderate compared to the east, suggesting that unreasonably high profits are not currently being made.

Stock Performance

• Stocks under Coverage: The average price of cement stocks fell by 4.5% last week.
• Individual Stock Performance:
  • BBMG dropped 2.2%.
  • CNBM dropped 7.9%, being the weakest performer.
  • Conch Cement and CR Cement were rated BUY, while BBMG was rated HOLD.

Valuation Metrics

Peer Comparison

Regional Cement Price Breakdown

• East China: Prices surged, with Anhui Conch and CNBM being the major players.
• South Central China: Prices increased, with CR Cement and Shanshui leading in production.
• Southwest China: Prices also rose, with CNBM and CR Cement as major contributors.
• North China: Prices were lower due to low supply from off-peak production suspensions.
• Northeast China: Prices were relatively stable, with CNBM and BBMG as key players.
• Northwest China: Prices showed minimal change, with Sinoma Group and Huaxin-Lafarge having significant market share.

Market Share by Clinker Capacity (2016)

Conclusion

The cement sector in China is experiencing a price surge across major regions, driven by tight supply conditions and production suspensions. The Guizhou DRC has taken notice of the price increases, emphasizing the need for fair competition and anti-trust compliance. While east China has seen the most dramatic price increases, Guizhou prices are more moderate, aligning with historical levels from 2013. The stock market has been negatively impacted, with an average drop of 4.5%. Valuation metrics suggest Conch Cement and CR Cement are in BUY territory, while BBMG is rated HOLD. The market share and capacity breakdown highlight the dominance of CNBM and Anhui Conch in several regions.