Stocks related to the Yarlung Zangbo River hydropower concept continue to surge, with stocks such as CONCH CEMENT, China Energy Construction, and China Railway Heavy Industry all reaching their daily limit. The Cement and Building Materials, Construction Machinery, Steel, and Water Conservancy Construction sectors are also rising.
In terms of ETFs, the Building Materials ETF from E Fund rose by 7.91%; the Infrastructure ETF and Building Materials ETF both increased by over 6%; the Infrastructure 50 ETF rose by over 5%; the Construction Machinery ETF rose by over 4%.
On July 19, the groundbreaking ceremony for the Yarlung Zangbo River downstream hydropower project was held in Linzhi City, Tibet Autonomous Region. The project is located in Linzhi City, Tibet, and will construct five tiered power stations with a total investment of approximately 1.2 trillion yuan.
Research Reports from China Securities Co.,Ltd. indicated that the Yarlung Zangbo River downstream hydropower project has officially begun. It is located in the downstream area of the Yarlung Zangbo River, with a total investment of about 1.2 trillion yuan, which is six times the annual total investment amount in Tibet. This has significant implications for driving western infrastructure development, promoting clean energy construction, and hydropower development. The scale and difficulty of the Yarlung project is immense, accounting for about 88.7% of China's total water conservancy investment for 2024. It is expected that enterprises in various fields such as water conservancy and hydropower construction, tunnel excavation/shield construction, civil explosives, power equipment, foundation treatment, and building materials will benefit.
Shanghai Securities believes that the scale of the Yarlung Zangbo River hydropower project is enormous and will bring considerable investment opportunities. The total investment of 1.2 trillion yuan will bring orders to related enterprises. Referring to the construction timeline of the Three Gorges Dam, which took 16 years from preparation to full operation of the right bank power station, it is believed that the Yarlung Zangbo River hydropower project may also require over 10 years. Assuming 12 years, the average annual investment could reach 100 billion yuan. The raw materials such as building materials and steel are experiencing both bullish supply and demand. The large-scale start of hydropower stations has increased the related demand for steel and building materials, coupled with the sixth meeting of the Central Financial Commission proposing to "promote the orderly exit of backward production capacity," expectations for supply-side reforms in related industries are rising. This brings dual benefits of supply contraction and demand increase to raw material industries like steel and building materials, making investment opportunities worth exploring.
Galaxy Securities stated that the Yarlung Zangbo River downstream hydropower project will directly stimulate cement demand in Tibet and surrounding areas. Additionally, under the background of cement "anti-involution" and supply optimization, there are expectations for price growth in cement in the southwest region, with leading regional cement enterprises set to benefit significantly. Moreover, the cement "anti-involution" intensifies, accelerating the optimization of the industry's supply-demand structure. In the second half of 2024, consensus on collaborative efforts among cement companies is expected to recover and continue into 2025, with improved execution of staggered production shutdowns, effectively regulating supply and leading to increased cement prices and recovery of gross margin. On July 1, 2025, further measures to "anti-involution" in the industry will be announced. The China Cement Association will issue opinions on further promoting the "anti-involution" and "stabilizing growth" for the high-quality development of the cement industry, promoting the unification of cement industry clinker production line filing capacity and actual capacity, verifying discrepancies, and swiftly addressing capacity differences while improving filing, environmental assessment, energy assessment, and other related procedures. It is expected that subsequent supply control efforts in the cement industry will be strengthened, with collaborative staggered production shutdowns among enterprises expected to continue and intensify, aiding in achieving short-term supply-demand stability. On the other hand, the impact of new regulations on capacity replacement in the cement industry is expected to accelerate, leading to effective capacity control, optimizing the supply-demand pattern in the industry, and assisting the cement industry in achieving high-quality development.
