Cement industry 2011 performance is encouraging investment peak

With the rapid development of investment in fixed assets in recent years, the investment in the cement industry has also reached a peak. Especially in 2011, new high-investment new production capacity was released in a concentrated manner. On the other hand, the growth rate of infrastructure investment was slowing, which directly led to a drop in cement demand and a serious excess of cement production capacity. However, benefiting from the rise in cement prices, listed companies in the cement industry have achieved gratifying results in 2011.

Favorable results show that, as of now, the cement industry has 13 companies announced the performance forecast, in addition to four ST companies, the remaining nine companies have expressed that 2011 will achieve net profit growth. Jiangxi cement, Tianshan shares, Sichuan Shuangma, Jianfeng Group and Fujian Cement are expected to grow at a rate of over 100%. The reason for the substantial increase in performance is that the sales price of cement products has risen year-on-year.

Among the five companies, Fujian Cement ranks the greatest among the growth. It is estimated that the net profit for 2011 will be approximately 126 million yuan to 134 million yuan, an increase of 14 to 15 times year-on-year. In 2011, the company’s transfer of Putian Jianfu Building and some residential properties were expected to earn more than RMB 20 million. However, the main reason for the increase in performance was that the average selling price of cement and clinker increased significantly compared to the previous year and the sales volume of the entire year was somewhat higher. increase. It is worth noting that the above forecast has not considered the possibility of selling available-for-sale gold assets. The company's major gold products include its shares in Industrial Bank and Industrial Securities. According to the Fujian Cement semi-annual report, the company holds 6,504.31 million shares in Industrial Bank and holds 3.003 million shares in Industrial Securities.

In addition to the rising prices of major products, gains from the transfer of assets have also given a lot of performance. Jiangxi Cement expects to achieve a net profit of approximately RMB 510 million in 2011, a year-on-year increase of 233%. In the report period, the company received a total investment of RMB 43.9891 million from Southern Cement Co., Ltd., and an investment income of RMB 34.906 million from the disposal of long-term equity investment of Jiangxi Shining Pharmaceutical Co., Ltd. In Shuangma, Sichuan, due to the merger of Dujiangyan Lafarge Cement Co., Ltd. during the reporting period, it is expected that the net profit for the year will be 161 million yuan and 177 million yuan, an increase of 374.49% and 421.65% year-on-year.

In 2011, the country's cement prices have gone from high to low. In the first half of the year, the cement market was very good. The price of cement's main products increased significantly year-on-year. However, after July, the national cement price oscillated down, and the cement market also embarked on a continuous downturn. However, the price coordination mechanism plays a certain role in stabilizing the cement price. Although the cement prices have declined in the second half of the year, the overall cement prices have been rising compared to last year.

Many research institutes under pressure in the future have stated that cement prices will continue to decline in 2012.

BOC International expects that the annual growth rate of cement demand during the “12th Five-Year Plan” period will fall from a compound growth rate of around 12% during the “Eleventh Five-Year Plan” period to a level of 3% 4%. Although the cement production line under construction has gradually decreased, but in the case of insufficient demand, the overcapacity will continue to increase in 2012, there is a large downward pressure on the price of cement. Stabilizing regional cement prices through price synergies and mergers and acquisitions will be the industry's future development direction. .

Shenyin Wanguo research report pointed out that the biggest risk of the cement industry in the future is still the decline in real estate investment, physical demand is worrying, affected by the cement industry in the first half of this year, performance is facing greater pressure, especially in the first quarter of negative growth performance has become a high probability event.

The Fitch Ratings Research report stated that given that the oversupply situation will continue, it is expected that the average price of the cement industry in China will be slightly reduced.

The former chairman of the China Cement Association, Lei Qianzhi, once said that if the economic situation at home and abroad does not show major fluctuations in 2012, the overall cement demand will continue to grow, but the growth rate will obviously decline compared with 2011.