virtualrealityarcade| Huatai Securities: Large-scale cement repricing sector welcomes the opportunity of revaluation

Zhitong Financial APP learned thatVirtualrealityarcadeHuatai Securities released a research report that the implementation of this round of cement price increases is expected to be more solid, while promoting the marginal improvement of industry profitability, it is also expected to bring better revaluation opportunities for the sector. In addition, the team believes that real estate sales are still the most important leading indicator, the stabilisation of new home sales or whether the cement industry profits can be reversed. More aggressive real estate policies and cement price repair bring revaluation opportunities for the industry.

Cement price repair, four important differences are worth paying attention to

Since May 20, some regional markets in East, Central, Northeast, Southwest and Northwest have announced price increases of 20-50 yuan per ton. Although demand is still not at the core of driving this round of price increases, we believe that four important differences are worth paying attention to.Virtualrealityarcade: 1Virtualrealityarcade. Compared with the repricing led by the Yangtze River Delta market in the first ten days of April, this round has a wider range and greater strength; 2Virtualrealityarcade. The early prices of some peripheral markets have been repaired, laying a better foundation for the implementation of prices in the core market; 3. The determination of leading enterprises to lead is stronger; 4. Clinker prices push up more than before, which is expected to better restrain the disturbance of independent grinding stations to the market. We expect that the implementation of this round of price increases is expected to be more solid, while promoting the marginal improvement of industry profitability, it is also expected to bring better revaluation opportunities for the sector. It is recommended that conch cement Ahammer H and Huaxin cement Ahammer H.

Strict implementation of the new national standard is more conducive to the survival of the fittest in the industry.

The new national standard of cement is planned to be implemented on June 1. The new standard puts forward mandatory requirements for cement components, which will increase the proportion of main raw materials such as clinker and gypsum in a ton of cement and reduce the amount of other admixtures. According to the estimation of cement net, the production cost of most cement enterprises may be increased by 10-30 yuan / ton. Some small and medium-sized enterprises and independent grinding stations for cost reduction considerations, the previous use of other admixtures is larger, the amount of clinker and gypsum is relatively small. If the new standard is strictly implemented and the control of clinker is tightened by enterprises, we expect that the cost of small and medium-sized enterprises will rise even more, which will help to further consolidate the competitiveness of large enterprises and promote the survival of the fittest in the industry.

The relationship between supply and demand is still fragile, and the stabilization of real estate sales is still the winner or loser of profit reversal.

As of May 25, the weekly average shipment rate of cement enterprises across the country was 54.3%, and the average cement shipment rate since May was 53.8%, and the same / month ratio-6.2/+5.1pct. Although we have seen an improvement in demand since May, this marginal improvement is modest or not enough to support the rebalancing of supply and demand in the industry, given the disturbance of Rain Water at the end of April. We believe that real estate sales are still the most important leading indicator, the stabilisation of new home sales or whether the cement industry can achieve a reversal in profits.

More aggressive real estate policies and cement price repair bring revaluation opportunities for the industry.

Since the Politburo meeting on April 30 set a more positive policy tone for the real estate industry, ministries and local governments are actively deploying and implementing, and looser housing eligibility and credit policies are expected to further stimulate demand for housing in the market. As the cement industry ushered in the most extensive and strongest price repair since 2024, we believe that the bottom of cement prices is also being initially built. As of May 24, the overall trading of the cement companies we covered was 0.5x Pripple B (1YFY), 37% lower than at the bottom of the previous cycle in 2014-2016 (1YFY). With the further implementation and effectiveness of the real estate policy, we expect that the demand floor and profit floor of the cement industry in the current cycle is expected to gradually appear, bringing better revaluation opportunities for the sector.

Risk tips: real estate sales stabilized more slowly than expected, industry competition is weaker than expected.