Mergers and acquisitions of large cement companies have formed an oligopoly pattern to achieve active removal of production capacity.
On the morning of May 17, the State Council will organize a conference on real estate work. At that time, it may announce measures related to the real estate sector.
Relevant leaders from the People's Bank of China, the Ministry of Housing, Urban-Rural Development, the State Financial Supervision and Administration, the Ministry of Finance, local governments, and heads of large financial institutions such as state-owned banks will all attend the conference.
Guoxin Securities said that in the short term, mainstream cities have successively optimized purchase restriction policies, which is expected to reverse pessimistic real estate expectations. Currently, real estate fundamentals have not improved significantly, and market confidence will take time to recover. Follow-up support policies are still expected to be further strengthened. Currently, valuations and holdings in the building materials sector are low, focusing on leading consumer building materials quality and some opportunities to recover overdue valuations.
Shen Wan Hongyuan pointed out that the cement industry was under pressure in 2023, and 2024 had a bad start, but the bottom signal was strong.
The bank believes there is not much room for further price cuts. The shutdown of production lines in the cement industry is relatively flexible. The entire industry was already in a state of overall loss in the first quarter. The leading company, Conch Cement, maintained profits through cost advantages, and companies in the industry lacked the motivation to further reduce prices and lose money or even lose production. Even if demand returns to average, the industry's willingness to maintain capital protection through collaborative production limits will still be evident.
CITIC Securities released a research report saying that the cement industry in mainland China is facing the problems of demand pressure and oversupply. Referring to the development experience of other countries/regions, the competitive landscape is mainly optimized through two methods of passively removing production capacity through policies and active removal of production capacity by enterprises within the industry.
The cement industry in mainland China may be able to adopt policies to speed up the exit of inefficient production capacity;
Carbon trading increases production costs and speeds up clearance for small businesses;
Mergers and acquisitions of large cement companies have formed an oligopoly pattern to achieve active removal of production capacity.
CITIC Securities comprehensively sorts out the three main investment lines:
1) Follow the overseas expansion of cement companies in mainland China;
2) Focus on industry leaders;
3) Focus on high-quality enterprises with high operational efficiency.
Companies related to the cement building materials sector:
China Building Materials (03323), Conch Cement (00914), China Resources Building Materials Technology (01313), Huaxin Cement (06655), Western Cement (02233), etc.