China cement sector now more consolidated

China cement sector now more consolidated
Published: 23 August 2011

Daiwa Securities says that compared with previous downcycles, the China cement industry is now more consolidated – there is far less capacity growth and supply discipline exists.

"The sector provides selective investment opportunities with good returns, despite macroeconomic headwinds globally."

The house says should investors want only one China cement stock in their portfolios, it recommends China Resources Cement, given its strong management team and that its key market, southern China (80%-90% of revenue), has the most favorable demand-supply picture.

Its next two picks are China National Building Material and Shanshui Cement, as they are the market leaders in the eastern and northeastern regions, where there is supply discipline.