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[Brokerage Focus] citic sec believes that the demand for the cement industry is expected to be in a downward trend in the medium to long term.
Jingu Financial News | Citic Securities stated that the cement industry's demand is expected to be in a downward phase in the medium to long term, with future industry changes focusing more on the supply side. In 2016, the supply-side reform of the cement industry led to a significant decrease in new cement clinker production capacity, but the speed of eliminating outdated capacity was slower than expected, and the industry still faces widespread overcapacity issues. Since 2024, cement demand has dropped significantly, with the industry suffering severe losses. The Ministry of Industry and Information Technology has revised and issued the "Cement Glass Industry Capacity Replacement Implementation Measures (2024 Edition)" in hopes of accelerating the clearance of over 0.3 billion tons of outdated cement clinker production capacity, reducing actual capacity from 2.1 billion tons to the designed capacity of 1 billion tons.
cr bldg mat tec (1313.HK): Looking forward to the price elasticity of the 24Q4 South China market.
The company released its Q3 report for 2024, with revenue of 16 billion yuan for the first three quarters, a 6% year-on-year decrease; net income of 0.31 billion yuan, a 52% year-on-year decrease; with Q3 2024 individual quarter net income of 0.14 billion yuan.
Hong Kong stock concept tracking|Real estate market transaction active, institutions highly concerned about cement supply side reform (with concept stocks)
The building materials sector as a whole is still in the slow recovery phase at the bottom, with valuations and positions also at low levels.
Fitch: Mainland stimulus measures help stabilize demand for basic materials, but challenges remain.
Fitch Ratings expects that the real estate stimulus measures recently announced in the mainland will help stabilize the demand for basic materials, boost manufacturers' confidence, and achieve more reasonable pricing. However, weak downstream demand, coupled with a lack of significant capacity reduction, will suppress price increases. The steel industry continues to face challenges, with production in the first nine months of this year decreasing by 4% year-on-year and average selling prices also falling. As downstream activities increase, pushing up the average price, steel producers' profit margins began to rebound in September and continued to rise in October. However, the industry believes that without production control, the widening of profit margins will not be sustainable. As for cement, production in the third quarter was due to demand.
HTSC lowered the target price of CR Bldg Mat Tec (01313.HK) to 3.53 yuan and rated it as a 'buy'.
htsc report stated that cr bldg mat tec (01313.HK) net profit for the first three quarters was 0.309 billion yuan, a 51.6% year-on-year decrease; net profit for the third quarter was 0.143 billion yuan, a 74.5% year-on-year increase, confirming the annual turning point in profitability as announced on October 14. The report pointed out that the cement prices in the Guangdong and Guangxi regions saw a temporary recovery in September, but since October, the upward momentum has resumed, with the approaching dry season of the Xijiang River expected to continue the price increase. As a leading cement company in southern China, the bank believes that the company is expected to benefit from the central profit restoration brought about by the easing of regional market competition. Maintaining a 'buy' rating.
CICC: Maintains Buy rating on CR Building Materials Technology (01313) with target price of HKD 2.5.
CICC lowered cr bldg mat tec (01313) 2024/25E net income attributable to parent company to 0.558 billion yuan / 1.13 billion yuan.
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