Hong Kong stock concept tracking | Cement sector accelerates clearing of excess capacity, industry profits are expected to marginally recover in the second half of the year (with concept stocks)

From the semi-annual report of 2024, the net profit of multiple listed companies in the cement industry has decreased year-on-year. Behind the profit pressure, the downturn in the real estate market has dragged down demand, and the imbalance between supply and demand has led companies into price wars, resulting in a continuous decline in industry benefits. Experts say that in the face of unfavorable market conditions, leading cement companies are strengthening their profitability resilience with their own advantages, expanding their market share; the implementation of policies such as carbon trading is expected to drive industry development to be more rational and accelerate the clearance of backward production capacity. At the same time, listed companies are actively exploring new growth points and expanding their businesses in aggregate and commercial concrete. Tianfeng's research report states that the current real estate industry has seen a series of policies issued at both ends of supply and demand, which may have a positive impact on improving the fundamentals of building materials in the real estate chain. Cement, fiberglass, and other varieties may reflect that they have reached a bottom in their pricing or show signs of recovery at this stage, which may still be a temporary low point for the traditional building materials fundamentals. Huatai's research report states that the total net profit attributable to the parent company of listed companies in the cement industry covered by its research in the first half of 2024 was 175 million yuan, a decrease of 98% year-on-year. According to data from the China State Construction Engineering Corporation Materials Association, the total profit of the cement industry in the first half of 2024 was -1.15 billion yuan, with more than 50% of the companies experiencing losses. While industry profitability is further bottoming out, companies are optimizing their operations: -Market strategies are shifting towards price stability, seeking to balance supply and demand through supply regulation; -Continued emphasis on cost control to strengthen competitiveness; -Further reduction of capital expenditures, with prioritizing cash flow assurance. Huatai believes that the consensus on price stability will help the industry achieve marginal recovery in profitability in the second half of 2024. The debt ratio of listed companies is still significantly lower than the bottom of the previous cycle, and their financial situation remains healthy. Related Hong Kong stocks in the cement sector include: - Anhui Conch Cement (00914), - WESTCHINACEMENT (02233), - CR BLDG MAT TEC (01313), - Huaxin Cement (06655).