NEWS CENTER

Cement industry profits in the third quarter or surprise


Release time:

Aug 10,2013

After entering July, affected by factors such as production and power restrictions, the cement industry showed a scene of off-season price increases. The reporter noted that the Ministry of industry and information technology recently announced the list of the first batch of enterprises to eliminate backward production capacity in industrial industries this year. The backward cement production capacity eliminated was 92.75 million tons, which was the largest among 19 industries. Cement prices are sensitive to changes in supply. In the second half of 2010, various localities have implemented measures such as power rationing to reduce consumption and eliminate backward production capacity. Limited by the impact of electricity, cement prices rose by more than 16% from 350 yuan/ton in July to 410 yuan/ton at the end of the year, with an average increase of 30% in the cement industry in the secondary market.

After entering July, affected by factors such as production and power restrictions, the cement industry showed a scene of off-season price increases.

The reporter noted that the Ministry of industry and information technology recently announced the list of the first batch of enterprises to eliminate backward production capacity in industrial industries this year. The backward cement production capacity eliminated was 92.75 million tons, which was the largest among 19 industries. Cement prices are sensitive to changes in supply. In the second half of 2010, various localities have implemented measures such as power rationing to reduce consumption and eliminate backward production capacity. Limited by the impact of electricity, cement prices rose by more than 16% from 350 yuan/ton in July to 410 yuan/ton at the end of the year, with an average increase of 30% in the cement industry in the secondary market.

Liu Yuanrui, an analyst at Changjiang Securities, told reporters that the fundamental risk of the cement industry is relatively small, and the main reason for the continuous rise in prices in the off-season is still the rapid de-stocking of inventory caused by power rationing. Considering the year-on-year decline in coal prices, East China's cement performance is expected to show high growth in the third quarter. From the valuation point of view, the cement industry demand has no super-seasonal factors, the company can pay attention to conch cement, Yanlianshan, Huaxin cement, Jiangxi cement.

According to WIND data, among the 14 companies in the cement industry that have reported a year-on-year increase of more than 100 per cent in net profit are Shangfeng Cement (1306.16 per cent), Qilianshan (300 per cent), Huaxin Cement, Jiangxi Cement and Sichuan Shuangma. And Yandong Cement, Tongli Cement, Tianshan shares, Tower Group reported net profit decreased by not less than 50% year-on-year. In addition, Jinyu shares reported a decline in net profit of about 0%-15%.

As of Wednesday's close, the 10 with the smallest A- share market capitalization of the 19 cement companies in the two cities are ST Shitou, Chaodong, Fujian Cement, Tongli Cement, Qinling Cement, Jianfeng Group, Ningxia Building Materials, Sichuan Shuangma, Jiangxi Cement and Shangfeng Cement. The top 10 cement companies that have changed hands in the past two months are Shangfeng Cement (213 per cent), Chaodong Stock (200 per cent), Sichuan Shuangma (186 per cent), Fujian Cement (167 per cent), Jianfeng Group (120 per cent), Qilian Mountain (91 per cent), Qinling Cement (78 per cent), Jiangxi Cement (77 per cent), Ningxia Building Materials (77 per cent) and Huaxin Cement (60 per cent).