Core view
On December 10, The central economic work conference stressed “We should adhere to the positioning that houses are used for living rather than speculation, strengthen expected guidance, explore new development models, adhere to the simultaneous development of rental and purchase, accelerate the development of long-term rental housing market, promote the construction of indemnificatory housing, support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the virtuous cycle and healthy development of the real estate industry due to urban policies”. The meeting of the Political Bureau of the CPC Central Committee mentioned the “virtuous circle” of the real estate industry for the first time in recent years, which is different from the previous statement only focusing on “promoting the stable and healthy development of the real estate market”, releasing a clear signal of rebuilding the confidence of the industry. We expect that the financing related to housing will be thawed gradually, and the reasonable and normal financing needs, land purchase, financing and other business behaviors of real estate enterprises are expected to gradually return to normal. At present, although the demand for rebar at the real estate end has not improved significantly, it is only a matter of time for the demand for rebar to improve under the expected improvement of real estate policy.
From the perspective of dynamic gross profit per ton of steel, due to the decline of double coke price and iron ore price, the billet cost hit the bottom, the steel price fell slightly this week, and the gross profit per ton of steel shrank. In terms of breakdown, cold rolling has the highest profit, with a long process of 1658 yuan / ton and a short process of 875 yuan / ton; Hot rolling has the lowest profit, with long process of 1118 yuan / ton and short process of 335 yuan / ton. Considering the high cost of steel enterprises in the early stage, the fourth quarter and next year may be the cost dividend period of the steel industry.
From the perspective of recent stock prices, we have been suggesting to pay attention to the targets with large early decline and bottom rebound, such as Hainan Mining Co.Ltd(601969) , Beijing Shougang Co.Ltd(000959) , Maanshan Iron & Steel Company Limited(600808) , which have rebounded to varying degrees in recent two weeks. At present, the steel plate has been in the relative bottom range. With the continuous recovery of the subsequent demand side, there may be a large space for value revaluation in the short-term plate. In the long run, under the background of carbon neutralization, the supply of the industry in the next few years will be continuously and long-term restrained, and the supply cycle will end. In the cycle of significant increase in industry concentration, with the optimization of competition pattern and the improvement of enterprise pricing power, the iron and steel industry may return to the profit margin of normal industrial products, and the industry valuation system may usher in switching. Therefore, in the short term, the bottom of the iron and steel industry may have appeared, and there may be a large space for value revaluation. In the medium and long term, there may be a switch from cyclical products to industrial products.
From the perspective of large decline in the early stage, it is suggested to pay attention to Jiangsu Shagang Co.Ltd(002075) , Xinyu Iron & Steel Co.Ltd(600782) , Hainan Mining Co.Ltd(601969) , Beijing Shougang Co.Ltd(000959) , Maanshan Iron & Steel Company Limited(600808) , etc; Focus on Lingyuan Iron & Steel Co.Ltd(600231) , Fangda Special Steel Technology Co.Ltd(600507) , Xinyu Iron & Steel Co.Ltd(600782) , Sansteel Minguang Co.Ltd.Fujian(002110) from the perspective of less impact of production reduction; From the perspective of growth, it is recommended to pay attention to: Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Zhangjiagang Guangda Special Material Co.Ltd(688186) , Citic Pacific Special Steel Group Co.Ltd(000708) .
Risk tip: macroeconomic repair is not as expected; Global inflation is higher than expected; The increase of ore production did not meet the expectation; The development and vaccination progress of covid-19 vaccine was lower than expected.
