Allocation of cement at the right time: under the action of multiple factors, the cement sector may usher in a sustainable market. This week, cement ushered in the biggest weekly increase in nearly five years. We think the market is still in the early stage and look forward to a long rise. Looking back on the market after the Spring Festival over the years, the rise of cement has almost never been absent, and the rise continues for 5 weeks and 18 weeks. In the current macro environment, the allocation value of cement sector is prominent for the following three reasons:
Steady growth is gradually realized under the support of wide credit, giving the cement sector valuation flexibility;
Cement has the attribute of low value and high dividend, which belongs to the current market style preference and has the margin of safety;
From the perspective of fundamentals, the supply side constraints in the first quarter made the industry environment more stable.
Glass: clockwise and tightly balanced. On the supply side, glass and cement are similar, both of which belong to high energy consuming industries and face supply side contraction. According to the guideline for energy efficiency upgrading of flat glass industry, the carbon efficiency reduction ratio of flat glass industry is lower than the benchmark by about 5%. Glass is a pro cyclical variety and does not belong to a variety stimulated by steady growth. "Guaranteed delivery" is the main logic for maintaining a high prosperity in glass demand this year. We believe that the investment value of glass lies in the price elasticity brought by the shortage of supply and the revaluation caused by the full understanding of the long business cycle. The upsurge of replenishment sentiment after the festival may indicate a high demand boom after the resumption of work, and the further elasticity of price needs to be catalyzed by the two logical mainlines of real demand exceeding expectations or supply side contraction.
Before and after the Spring Festival in 2022, the enthusiasm for goods preparation in the middle and lower reaches is high, and the replenishment demand of traders and processing plants is sufficient. During the Spring Festival this year, the manufacturer's inventory increased by 8.32 million heavy boxes, an increase of about 5 million heavy boxes less than that in previous years. The real demand of guaranteed delivery building in the next stage will be the key factor to determine the glass price. The long-term supply and demand of glass is in tight balance, and the long business cycle is expected to continue. The backward production capacity in the industry is the safety cushion of the glass base price. The industry leader has profit advantages. We are fully optimistic about the stability and sustainability of the high profit level of the traditional business of the leading enterprises, and the investment value should be revalued. In addition, the layout of the float leader in the innovative business also opens up room for growth.
Tracking of key sub industries:
Glass: as of February 11, the average price of the latest glass in China was 2285.45 yuan / ton, up 4.02% month on month compared with the previous week, rising continuously. Downstream replenishment enthusiasm is high, the overall stock is relatively positive, just need to recover gradually, and the price is still expected to rise. The total inventory of production enterprises in key monitoring provinces was 43.42 million weight boxes, a significant increase of 8.32 million weight boxes compared with that before the festival, which was much less than that during the Spring Festival in previous years, with a year-on-year decrease of about 5 million weight boxes. Continuing to rise requires the logical catalysis of two main lines: the real demand of the downstream exceeds the expectation or the contraction of the supply side. It can not be verified in the short term, and the shock may dominate the market. We are highly optimistic about the long business cycle of the glass industry. The annual net profit of the glass leader is expected to remain high, and there is no risk of downward cycle. Continue to focus on recommending Zhuzhou Kibing Group Co.Ltd(601636) glass, which has entered a new growth period and continues to improve its market share.
Cement: as of February 11, 2022, the national average price of cement was 470.67 yuan / ton, up 0.02% month on week and 5.7% year-on-year. After the Spring Festival, the price is basically flat, the market demand is recovering slowly, and the supply side production has not recovered yet. Provinces and regions across the country have successively announced plans to stop kilns during peak shifts in the first quarter, and the number of days to stop kilns generally exceeded that in the same period last year. The northern provinces continued to implement staggered peak production from January to March, and the kiln closures in the southern provinces in the first quarter were mostly concentrated during the Spring Festival. The inventory of enterprises decreased slightly compared with that of last week, and the average ratio of clinker storage capacity in China was 52.99%, down 3.02% compared with that before the Spring Festival. The average price difference between cement and coal in this period increased by 1.39%.
Consumer building materials: the sentiment of the sector will continue to be suppressed before the real estate sales commencement data pick up. The social finance data released this week once again verifies that the medium and long-term housing loan demand of residents remains weak, and the repair of the real estate sales side has not yet come. We expect that the policy side will still maintain its support for the real estate recovery, and the introduction of the new policy is expected. After the industry impairment crisis, the emphasis on business quality will slightly loosen the accelerator of growth. In addition, the risk of overseas interest rate increase may put pressure on the growth style for a period of time. We suggest to select the leading waterproof and pipe leaders in non real estate business. Continue to recommend Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Zhejiang Weixing New Building Materials Co.Ltd(002372) , Dehua Tb New Decoration Material Co.Ltd(002043) and China Liansu.
Market review: as of the closing on February 11, the building materials sector rose 7.02% and the CSI 300 index rose 0.82%. From the perspective of sector ranking, the building materials sector ranked fourth among Shenwan 31 sectors last week, with an increase of - 1.16% year to date, and ranked ninth among Shenwan 31 sectors.
The top five stocks rose: Guangdong Sanhe Pile Co.Ltd(003037) , Shandong Longquan Pipeline Engineering Co.Ltd(002671) , Ningbo Fuda Company Limited(600724) , Zhengwei new material, Huaxin Cement Co.Ltd(600801) .
The top five stocks fell: Asia Cuanon Technology (Shanghai) Co.Ltd(603378) , Dongguan Huali Industries Co.Ltd(603038) , Zhejiang Youpon Integrated Ceiling Co.Ltd(002718) , St Yabo, Xiamen Wanli Stone Stock Co.Ltd(002785) .
Investment strategy: focus on recommending Zhejiang Weixing New Building Materials Co.Ltd(002372) with dominant consumption attribute in building materials, Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) with constant strength of the strong, Zhuzhou Kibing Group Co.Ltd(601636) with high prosperity of traditional business and entering a new growth period, and Xinyi Glass, an industrial leader with continuously improved market share; It is suggested to pay attention to China Liansu, the leader of engineering plastic pipe benefiting from infrastructure investment, and Anhui Honglu Steel Construction(Group) Co.Ltd(002541) the leader of steel structure. At the same time, it is recommended to recommend the cement sector with underestimated value and high dividend under the expectation of steady growth.
Risk tip: the demand of real estate chain declines, infrastructure investment slows down, and the price of raw materials fluctuates.
