Building construction materials or beneficiary urbanization

At the National Development and Reform Work Conference recently held, the National Development and Reform Commission proposed that next year it will focus on deepening reform and opening up, and strive to make new breakthroughs in important areas of reform, and strive to protect and improve people's livelihood. What is different from previous years is that the focus of the National Development and Reform Commission's work in the next year has changed from the usual eight items to nine, adding new content to urbanization.

Guotai Junan stated that China's urbanization rate exceeded 50% for the first time in 2011, reaching 51%, but it was only comparable to Japan’s in the 1950s and far below the level of more than 70% in the past century in Japan, the United States, and Switzerland. Therefore, it is expected that China will continue to increase its urbanization rate for quite a long time.

Judging from the process of urbanization in Japan, Japan’s urbanization rate reached 63% in the 1960s, but public construction and housing construction still maintained a high growth rate of over 15% until the urbanization rate reached 74%. In the process of 50%-70% urbanization in China, in order to adapt to the increase in the urban population, it is expected that the housing and infrastructure construction will maintain a relatively high growth rate in the long term. CITIC Securities (600030, stocks) said that listed companies in the construction sector have many advantages such as low valuations and strong predictability of order performance. Under the current trend of accelerated infrastructure and real estate investment, the construction industry is rated stronger than the broader market. At the same time, from a long-term perspective, the promotion of urbanization will inevitably generate investment demand in the areas of highways, real estate, industry, etc. The construction industry will take the lead to benefit, and is the preferred target for urbanization beneficiaries.

Taking the cement industry as an example, Cinda Securities stated that with the intensification of new urbanization, investment development in the future urban economic circle is expected to accelerate its development, with the relatively mature economic circumstances in the eastern Beijing-Tianjin-Hebei, Yangtze River Delta, and Pearl River Delta further improving. While the Midwest region will accelerate the formation of new growth opportunities, the cement industry will benefit from it.

Guotai Junan further analyzed that from the historical experience, the cumulative per capita consumption of cement and other building materials is clearly S-shaped along with the urbanization rate and industrialization progress, and the consumption intensity is inverted U-shaped with the increase of per capita GDP, and the United States, France, Germany and other developed countries. The history of the country’s cement industry also confirms this view. For example, Japan’s cumulative consumption of cement per capita was only 91 kg in 1950. After 30 years of rapid development, per capita consumption reached 705 kg in 1979. The cumulative consumption per capita surpassed 11 tons, and then the per capita consumption has stabilized and declined. The annual per capita consumption has been 550-650 kg. Between fluctuations.

The urbanization rate of foreign cement consumption peaks at around 70-80%. At present, China's urbanization rate is 51%. Similarly, China's per capita cumulative consumption is also lower than the peak level of developed countries. The national plan to achieve a GDP growth rate of 7.5% by 2020 means that China's cement demand has not yet reached its peak. Guotai Junan said that the long-term demand for real estate and infrastructure will bring about an increase in cement demand. It is expected that before the peak in 2018, the growth rate of cement demand in China will maintain roughly 5% per year.

For 2013, Guotai Junan stated that due to maintaining a healthy currency, the active fiscal will provide macro support to the cement stock price, and the increase in cement production capacity will decrease in 2013. Overall, cement prices in the next year will be significantly better than this year. Judging from the time point, it is estimated that there are two band prices. First, due to the resumption of real estate construction, the stabilization of government policies during the term of the government, and the rebound of cement prices, three factors will drive cement prices up from February to April next year; second, the third quarter of next year, with the anticipated renewed stability, rising cement prices, and cement Performance ushered in the inflection point rise, September-November or a wave of rising prices.