Guanghua Holdings Acquires Huzhu Jinyuan Cement for 2.5 Billion Yuan, Hits Daily Limit Up at Open Today

　　Guanghua Holdings hit the daily limit up at the open. As of 9:32, the stock rose 10.08% to 6.55 yuan. Guanghua Holdings, which entered the cement industry by acquiring Qinghai Lake Cement, has tasted the benefits; rising cement prices have prompted the company to shift from real estate development to cement manufacturing. In terms of news, the company announced on the evening of the 8th that it plans to acquire 100% equity of Qinghai Huzhu Jinyuan Cement Co., Ltd. (hereinafter referred to as "Huzhu Jinyuan Cement") through the issuance of shares. The estimated value of the assets to be purchased in this transaction is approximately 2.535 billion yuan.

　　United Cement Suspended Pending Inside Information

　　United Cement (01312.HK) was suspended from 9 a.m. pending the release of an announcement containing inside information.

　　Increasing Smog Weather, Many Cement Plants Shut Down Under High-Pollution Inspections

　　This is largely related to the current high-pressure environmental protection policies. Mainly because cement is a high-pollution, high-energy-consumption industry, and against the backdrop of increasing environmental pressure, the possibility of further expansion of the cement industry in the future is not great.

　　Due to the increase in smog weather recently, regions such as Beijing-Tianjin-Hebei have begun inspections of high-pollution industries. During the inspections, a large number of small and medium-sized cement production lines were shut down. Therefore, the supply side continues to shrink. With demand maintaining steady growth, factors such as rising environmental pressure, strict control of new capacity, and changes in corporate management thinking brought about by increased market concentration have kept the supply side in a continuous contraction pattern.Average Cement Price Rises for 8 Consecutive Weeks

　　Last week, the national average cement price rose 0.78% week-on-week. Regions with price increases include Henan, Shanghai, Jiangsu, and parts of Zhejiang, with increases of 20 to 30 yuan per ton. This means that China's average cement price has risen for eight consecutive weeks, and market expectations for the cement industry's profitability next year have positively changed.

　　Cement Industry Emission Standards Tightened, Particulate Matter Standard Still Too Loose

　　On December 5, the Ministry of Environmental Protection reviewed and in principle approved the "Emission Standard of Air Pollutants for Cement Industry", adjusting the emission limits of air pollutants for the cement industry. The report did not disclose the details of the revised standard, stating that the Ministry of Environmental Protection will further revise it and jointly issue and implement it with the General Administration of Quality Supervision, Inspection and Quarantine. The drafting team conducted sample statistics: in terms of sulfur dioxide emissions, 78% of cement kilns can be controlled within the revised standard; but for particulate matter, 40% of cement kilns still cannot meet the revised standard of 30 mg/m³. Nevertheless, Wu Shangan still believes that the revised 30 mg/m³ is still too loose, "far from the current haze situation and the requirements for controlling PM2.5." He told reporters yesterday that it is not difficult for the cement industry to meet the revised standard; the key is technological upgrading.

　　Cement Prices Remain Firm, Two Types of Cement Stocks Worth Watching

　　Up to now, the increase in cement prices has exceeded expectations; the supply-demand relationship in the cement industry will continue to improve in 2014. We can look at the cement price performance in the first quarter of next year (the slackest quarter). If prices can remain relatively firm, the above judgment will hold, and the industry will have opportunities for both profit and expectation improvement. Two types of cement stocks can be considered. First, cement stocks in regions with high market concentration, such as Conch Cement and Chaodong Cement; second, cement stocks in regions with strong environmental inspections, such as BBMG Corporation. Huatai Securities gave BBMG Cement a "Buy" rating.