The correction of the target of steady growth slightly underperformed the CSI 300 index. Last week, the building materials sector fell by 5.0%, underperforming the CSI 300 index by 0.5 percentage points, and the overall target of steady growth showed a correction. We judge that the main reasons are as follows: 1) the sector rose greatly in the early stage, while the end of January was a concentrated window for performance forecast, and the market was worried that the performance of some companies was lower than expected; 2) According to the statistics of the company's macro team, at the two provincial meetings held at the end of January, the growth target of fixed investment in 2022 announced by some provinces was lower than that in 2021, making the market worried about the implementation of steady growth. We maintain our previous judgment that we still need to choose categories and companies with clear policy core benefits and medium-term growth logic for annual investment.
The Q4 performance of the sector is under pressure or has been pricein, and the differentiation is preferred in the future. At the end of January, a number of building materials enterprises issued performance forecasts. Most enterprises fell year-on-year in the whole year and Q4, mainly due to: 1) the downward pressure of Q4 economic cycle, 2) the overall price of raw materials is still high, affecting the gross profit margin, and 3) due to the collection of downstream customers, some companies accrued more impairment in 2021. However, we believe that most of the "bad news" has been price in, which is reflected in the valuation correction of most sectors, and the risk has been mitigated. Looking forward to 2022, we still need to pay attention to the impact of product price transmission on gross profit margin and cash flow risk. Building materials enterprises with strong channel control ability and high product bargaining ability are expected to perform better, and the differentiation within the subdivided track may show an increasing trend in general. In the whole year, we still recommend affordable housing supporting + prefabricated and other beneficiary enterprises, and pay periodic attention to cement and central enterprise buildings that are expected to be repaired by valuation.
The pre issuance of special bonds is conducive to the implementation of the project, paying attention to the differentiation of new demand and the leverage ratio of social capital. According to relevant statistics and wind data, due to the strict supervision of hidden debt, some provinces have lowered the growth rate plan of fixed investment in 2022, but the reserves of new and old infrastructure projects are still abundant. In January 2022, the issuance of new special bonds by local governments across the country was 484.376 billion yuan (January 2021: not issued). Compared with the issuance rhythm in 2021, the issuance in 2022 was ahead as a whole, It is conducive to project implementation throughout the year. However, considering that 2023-2025 is the peak period of local government debt repayment, it is judged that the proportion of "borrowing new to repay old" in areas with high debt risk may rise, and the actual new demand is expected to tilt to provinces with better financial conditions and low debt repayment pressure. In addition, although the state allows special bonds to be used as the capital of major projects in 2019, the proportion of special bonds in the capital in the actual implementation is obviously lower than the upper limit of 25%. Under the background that the national financial work conference in December continues to emphasize the guiding and driving role of government investment, the proportion of special bonds leveraging the project capital in 2022 is also worthy of attention, Provinces with better financial conditions are also expected to be more likely to leverage social capital.
Before the construction glass Festival, raise the price and go to the warehouse, and pay attention to the "quantity, cost and profit" of photovoltaic glass all year round. According to Zhuo Chuang data, the average price of float glass nationwide rose by 32.7 yuan / ton (1.58%) month on month in the last week of January. Traders prepared goods actively, and inventories in most regions decreased to a certain extent. This situation is rare in the off-season before the Spring Festival over the years. It is judged that the demand for float glass will remain resilient under the "guaranteed delivery" throughout the year, while the supply side will remain good due to the large number of old kilns, and the price of the whole year is expected to maintain a month on month upward trend, although there is pressure year-on-year; After the Winter Olympics, due to the gradual release of the demand for environmental protection and the gradual transmission of the relaxation of real estate policies, the demand for float glass in the small peak season after the Spring Festival is expected to accelerate the release, and the increase of glass price may exceed expectations. The annual opportunity comes from photovoltaic glass. It is judged that this year is a competition of quantity, cost and profit. With the decline of module installation cost, the industry is expected to bring large volume. Glass and photovoltaic glass enterprises with high proportion of quantity, cost and profit will have systematic opportunities.
Risk warning. Demand is lower than expected, cost is higher than expected, systemic risk
