内容简介
The industry is up by 17% since early July on power
rationing and improving property construction data.
However, we have less confidence on short-term
demand. The long-term outlook looks gloomy too.
We downgrade Conch to EW, Sinoma to UW.
We were wrong in our April 24 upgrade call: We had
expected a tradable rally on the back of improving
property construction activities since 2Q but that did not
materialize, due to liquidity tightening in 2Q.
Since early July, the industry is up 17% compared to
the MSCI Index, which is up 13%. This is due to: 1) price
hike on power rationing; 2) positive July property
construction data; and 3) anticipated acceleration of
infrastructure spending.
We have less confidence on the short-term outlook
as: 1) power rationing has ended; 2) our channel check
with concrete mixers suggest property construction
activities did not improve as macro data shows; 3)
property starts may slow in 4Q13 as sales has slowed.
Long-term outlook also looks gloomy: Our study of
developed countries’ cement markets lead us to be
more cautious on the long-term outlook for the industry,
due to high cumulative consumption per cap, margins
being likely to fall once demand starts to peak, and
consolidation not helping to improve margins.
Stock ideas: Our stock preference is driven by: 1)
regional outlook; 2) valuation; and 3) net gearing trend
into 2H13-2014, which has been investors’ area of
focus. We prefer Conch the most and Shanshui the
least. Risk:Sharp increase of infrastructure spending.