Cement Industry: Integration Drives Performance Differentiation

In the past 12 years, the prosperity of the cement industry was low and high, and it was faced with the challenge of increasing demand uncertainty. The market synergy of leading enterprises in the eastern and central regions will be more effective.

According to the research report of China National Gold Corporation on January 4, 2012, the supply and demand of the cement industry is basically balanced. From 2010 to 2011, the fixed-asset investment growth in the cement industry was 3% and -12%, respectively, and it is expected that the fixed-asset investment in the cement industry will continue to decline by 15% and 10% respectively in 2012 and 2013. It is expected that cement demand will increase by 6% in 2012 (up to 8.1%), effective production capacity will increase by 4.7% (60 million tons will be eliminated by backward production capacity), supply will increase by 5.8%, and supply and demand will be basically balanced. In 2013, cement demand is expected to increase by 5.5%, effective production capacity to increase by 3.1% (out of backward production capacity by 30 million tons), supply will increase by 4.8%, and there will be a supply gap.

In 2012, the prosperity of the cement industry was low and high. In the first half of the year, with the deceleration of macroeconomic growth and fixed asset investment growth, cement demand growth will also periodically bottom out, which is expected to be 4-6%. In the second half of the year, policy adjustments starting from October 2011 will gradually The economic development will drive the cement demand to rebound in the second half of 2012 and it is expected that the year-on-year growth rate will increase to 6-8%. In the first half of this year, the year-on-year growth prospects for price and profitability are not optimistic, and the year-on-year growth is expected to be positive. The supply and demand conditions in the Northeast, North China, and South China tend to be good, the concentration in East China and Central China is high, and the market is cooperative and sound. According to statistics on new production lines in each region last year and this year and the pre-judgment of demand in each region, it is expected that the supply and demand in the three regions of Northeast China (Haiji Liao), North China (Beijing-Tianjin-Hebei) and South China (Guangdong-Guizhou) will improve significantly this year. . It is expected that the price in the northeast region will increase by 8%, in North China and South China by 2-3%. Prices in eastern China will fall by 3-5% year-on-year, while those in the northwest will fall by 5-10% year-on-year.

In 2011, the market synergy among leading companies in East China and Central China has achieved initial success in increasing trust and running-in. It is expected that in 2012, facing the challenge of increasing demand uncertainty, the market synergy of leading companies in the East and Central China will be more effective. The market share of the top ten cement groups in 2012 will reach 48%. By the end of 2011, the market share of China's cement industry's top ten cement manufacturing groups has reached 41%. It is estimated that by the end of 2012, the market share of the top ten group's coverage capacity will reach 48%, and the top three market share will reach. 29%, about 100 million tons of production capacity will be integrated by large enterprise groups in 2012. It is estimated that by the end of 2015, the market share of the top ten group's coverage capacity will reach 62%, and the top three market share will be 34%.

Risk: The price in the first quarter of this year exceeded expectations; the pace of liberalization of macroeconomic policies was lower than expected; this year's economic growth slowed more than expected.