Hong Kong Stock Concept Tracking | Shandong Cement Enterprises to stagger production for 120 days starting from November 15th, Cement industry is expected to see both quantity and price rise (with concept stocks)

On November 12th, the Department of Industry and Information Technology and the Department of Ecology and Environment of Shandong Province issued a notice on organizing the normalized peak-shifting production of cement for the years 2024-2025. The notice specifies that peak-shifting production times shall strictly follow the regulations of the Ministry of Industry and Information Technology and the Ministry of Ecology and Environment. Peak-shifting production during the heating season will be from 00:00 on November 15, 2024 to 24:00 on March 15, 2025, totaling 120 days. The Provincial Cement Industry Association may, based on actual market supply and demand conditions, increase the number of peak-shifting production days during the non-heating season through autonomous negotiations within the industry, to the extent that it can regulate supply and demand conflicts, alleviate inventory pressure, enhance industry efficiency, and implement self-regulation within the industry. In the first three quarters of this year, the utilization rate of the national cement market capacity has significantly decreased. The China Cement Association predicts that the total profit of the cement industry in the first three quarters will decrease by around 65% year-on-year, with the industry's sales profit margin falling to less than 2%. However, the cement industry is expected to reach a turning point of simultaneous increase in quantity and price in the fourth quarter. "Despite the poor performance in the first three quarters, the cement industry is expected to achieve a performance rebound in the later period through policy adjustments and improvement in market demand." Chen Bolin, President of Digital Cement Network, believes that with the gradual improvement in the macroeconomic environment, the cement industry is expected to experience a positive transformation of simultaneous increase in quantity and price in the fourth quarter. "This trend is mainly due to the increased policy support at the national level, the introduction of a series of incremental policy measures, and the acceleration of the issuance of special bonds to ease the tight funding situation, which will effectively increase the commencement rate of downstream engineering projects and slow down the downward trend of cement demand." Guolian's research report states that against the background of a continued significant increase in industry profit pressure in the first half of 2024, most regions have continued to increase the intensity of peak-shifting in the cement industry in the third quarter of 2024. The industry's supply and demand situation is gradually improving, cement prices are continuously rising slightly, showing some characteristics of "not so slack" in the off-season, and industry profits have improved both month-on-month and year-on-year. Currently, the profitability of the cement industry may be in a historically low area, and the valuation of major cement enterprises is also at historical lows, suggesting more attention to positive changes in policies, industries, and enterprises on multiple fronts. Regarding targets, it is recommended to focus on cement industry leaders with scale advantages, technological advantages, and regional market leadership, especially those representing central state-owned enterprises. Cement-related Hong Kong stocks include: Anhui Conch Cement (00914), CR BLDG MAT TEC (01313), Asia Cement (00743), WESTCHINACEMENT (02233), CNBM (03323), and others.