NEWS CENTER

Guaranteed Housing Drives Cement Stocks to Soar in 12th Five-Year Plan Industry to Maintain High Business


Release time:

Apr 07,2012

Last week, the biggest winner in the Shanghai and Shenzhen industry sector was the cement sector. Statistics show that the cement building materials industry had a net inflow of 0.911 billion yuan last week, ranking first in the list of net capital inflows. Industry insiders pointed out that although the current cement demand is in a period of low growth, the total number of tasks related to the construction of affordable housing, high-speed rail construction and water conservancy construction in the "Twelfth Five-Year Plan" will not change at will. Therefore, the cement industry is in the "Twelfth Five-Year Plan". During the period, supply and demand will remain basically balanced, and it is expected that there will be a valuation repair market in the industry in 2012. On Friday, cement stocks became the brightest stars in the market. Among them, Guangzheng Steel Structure, Sichuan

Last week, the biggest winner in the Shanghai and Shenzhen industry sector was the cement sector. Statistics show that the cement building materials industry had a net inflow of 0.911 billion yuan last week, ranking first in the list of net capital inflows. Industry insiders pointed out that although the current cement demand is in a period of low growth, the total number of tasks related to the construction of affordable housing, high-speed rail construction and water conservancy construction in the "Twelfth Five-Year Plan" will not change at will. Therefore, the cement industry is in the "Twelfth Five-Year Plan". During the period, supply and demand will remain basically balanced, and it is expected that there will be a valuation repair market in the industry in 2012.

On Friday, cement stocks became the brightest stars in the market. Among them, Guangzheng Steel Structure, Sichuan Shuangma, Tongli Cement, Tower Group, Jinyu shares and other stocks rose and stopped strongly, Fujian Cement rose 9.78 percent, Jianfeng Group rose 8.72 percent. Previously, the cement sector suffered frequent setbacks due to pessimistic demand expectations in the industry, and the overall price-to-earnings ratio (PE) valuation of the sector hit a record low of 9 times.

Zhou Wei, an analyst at Founder Securities, said that real estate supported the growth of cement demand in 2011, with cement production expected to increase by 11%, and the pulling effect of real estate weakened in 2012. Considering that the growth rate of my country's fixed asset investment during the "Twelfth Five-Year Plan" period may decline to about 18%, and the investment growth rate of the "three downstream" will decline even faster, it is expected that the average growth rate of cement production from 2012 to 2015 will decline to 4.1.%.

Judging from the supply and demand situation next year, the total demand of the cement industry may not be as bad as people think. Chen Bairu, an analyst at Donghai Securities, pointed out, "although all kinds of construction investment in the country are currently facing considerable financial pressure, the possibility of changes in the total investment amount is relatively small, so the total demand for cement driven by investment will not be reduced, but the time for the release of demand has been postponed, so the cement industry will still maintain a high economic operation during the 12th five-year Plan period."

At the same time, market participants believe that large-scale new production capacity will still be released into the market next year, and overcapacity will become more obvious by then.

At present, PE valuation in the cement industry has reached a record low. Zhou Wei predicts that "the gross profit margin and profit growth rate of the industry may bottom out in the second quarter of next year. Historical experience shows that improving or maintaining a high profit will help improve the valuation. Therefore, it is expected that there will be a valuation repair market in the industry in 2012, and the best investment time is expected to be in the second quarter of next year."