Selective China cements stocks are outperforming with China National Building Material rising 0.1% to HK$16.48, adding to its 1.7% gain Wednesday, which came on China MIIT’s release (on May 10) of its capacity elimination targets for the cement industry.
UOB KayHian says while it doesn’t have the detailed elimination target of each province, based on newsflow, MIIT has set heavier elimination task for Hebei, Shanxi, Henan and Zhejiang provinces this year so as to upgrade local industrial structure and improve the quality of long-term economic growth.
UOB believes BBMG and CNBM, which have exposure in Hebei and Zhejiang, will benefit from more disciplined supply side going forward. BBMG is down 1.8% at HK$12.18. CNBM’s all-time high if HK$16.68 hit May 3, which is likely to be tested, especially if broad market conditions improve.