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_711kb
报告摘要
China Cement Weekly Summary - February 05, 2018
Core Content
The China cement sector experienced continued price declines and reduced demand during the week, primarily due to adverse weather conditions and the approaching Chinese New Year (CNY). The national average cement price dropped by 0.4% week on week to RMB398/tonne. Regional price drops ranged from RMB20-30/tonne in areas like Shanghai, Jiangxi, Jiangsu, Zhejiang, Henan, and Chongqing, while Inner Mongolia saw an increase of RMB20-30/tonne.
Cement demand remained weak, with construction activity in real estate and infrastructure projects slowing down. The report suggests that further price cuts may not be effective in stimulating demand before CNY, leading to a likely stabilization of prices in the near term. However, post-CNY, some high-price regions may see price reductions to help recover demand.
The national cement inventory level rebounded moderately to 57.31%, indicating a potential easing of supply pressure in the coming weeks.
Key Market Observations
- Coal Prices: Remained stable, with the Bohai-Rim Steam Coal (Q5500K) index at RMB577/tonne, down 2.2% year on year.
- Production Suspensions: Off-peak production suspensions are becoming a more long-term strategy, as Jiangxi's government announced suspensions of not less than 55 days annually between 2018 and 2020, mainly during CNY, the hot season, and high-pollution periods.
- Stock Performance: Cement stocks showed mixed performance. CNBM (3323.HK) was the best performer, rising 3.1% week on week, while BBMG (2009.HK) was the weakest, falling 3.5% week on week.
Valuation and Financial Metrics
| Company | Ticker | Rating | Price (HK$) | Market Cap (US$m) | PER (2016) | PER (2017E) | PER (2018E) | EV/EBITDA (2016) | EV/EBITDA (2017E) | EV/EBITDA (2018E) | Net Debt/Equity (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Conch Cement | 914 HK Equity | BUY | 44.70 | 30,995 | 24.5 | 14.4 | 12.1 | 12.9 | 8.8 | 7.5 | Net cash |
| CNBM | 3323 HK Equity | BUY | 8.58 | 5,939 | 43.3 | 12.3 | 9.3 | 11.3 | 8.8 | 7.9 | 210 |
| BBMG | 2009 HK Equity | HOLD | 3.89 | 8,176 | 15.6 | 11.9 | 9.9 | 15.4 | 10.1 | 8.6 | 84 |
| CR Cement | 1313 HK Equity | BUY | 6.08 | 5,092 | 21.2 | 10.6 | 9.9 | 11.0 | 7.6 | 7.2 | 42 |
Key Financial Metrics Summary
- Simple Average: EPS Growth 109.1% (2017E), 22.2% (2018E); 2016–2018E CAGR 57.5%; PEG 6.62 (2016), 11.11 (2017E), 12.07 (2018E); Dividend Yield 2.6% (2018E).
- Weighted Average: EPS Growth 84.3% (2017E), 22.2% (2018E); 2016–2018E CAGR 48.6%; PEG 8.99 (2017E), 13.76 (2018E); Dividend Yield 2.8% (2018E).
Regional Market Share in Clinker Capacity (2017)
| Region | Anhui Conch | CNBM | CR Cement | Shanshui | BBMG | Asia Cement | WCC | Huaxin-Lafarge | Sinoma Group |
|---|---|---|---|---|---|---|---|---|---|
| East China | 20.0% | 25.7% | 1.5% | 5.5% | 0.5% | 0.0% | 0.0% | 0.0% | 2.7% |
| South Central China | 11.6% | 10.3% | 10.9% | 0.3% | 0.7% | 2.2% | 0.0% | 7.8% | 2.4% |
| North China | 0.0% | 6.7% | 2.0% | 5.8% | 30.4% | 0.0% | 0.0% | 0.0% | 1.9% |
| Northeast China | 0.0% | 22.3% | 0.0% | 9.4% | 6.7% | 0.0% | 0.0% | 0.0% | 0.0% |
| Southwest China | 11.7% | 25.1% | 3.6% | 2.9% | 5.6% | 0.9% | 1.0% | 2.8% | 4.7% |
| Northwest China | 7.5% | 0.0% | 0.0% | 0.7% | 6.0% | 0.9% | 1.0% | 2.8% | 4.7% |
| Grand Total | 11.1% | 16.0% | 3.6% | 2.9% | 5.6% | 0.9% | 1.0% | 2.8% | 4.7% |
Key Points
- Cement prices are expected to stabilize before CNY, with potential price reductions post-CNY in high-price regions.
- Off-peak production suspensions are becoming a more permanent measure to maintain supply discipline.
- Regional demand fluctuations are influenced by weather and construction activity.
- The cement sector's valuation metrics show mixed performance, with some companies showing strong EPS growth and others experiencing declines.
- Market share and regional exposure are significant factors in the sector's dynamics, with certain companies dominating in specific regions.
Disclaimer and Disclosure
- This report is not for distribution in jurisdictions where it would be illegal.
- Information is based on sources believed to be reliable but not guaranteed.
- The report does not constitute an offer or solicitation to buy/sell securities.
- China Galaxy International may have financial interests in the companies mentioned.
- Analysts have not engaged in trading the covered securities within 30 days prior to the report's release.
Analyst Certification
- The analyst certifies that the views expressed accurately reflect personal opinions.
- No compensation was received for the specific views in this report.
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 for price movement; no clear signal to reinstate BUY or downgrade to SELL.
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