Talk every Monday: clear governance direction and pessimistic reality breed opportunities
The Ministry of housing and urban rural development set the work direction of the whole year: at the high-quality development conference of housing and urban rural construction on February 24, the leaders of the Ministry of housing and urban rural development sorted out the work focus, pointing out that the rigid demand for housing in China is still strong, and the future urban construction will focus on both stock upgrading and incremental structural adjustment. In terms of the stable operation of the real estate market, we should continue to adhere to the positioning of housing without speculation. On the one hand, we should maintain the continuity and stability of regulatory policies. Stabilizing land prices, house prices and expectations is an important starting point. To achieve “guaranteed delivery” by resolute means; The fourth is to continue and standardize the order of the real estate market. In the construction of indemnificatory housing, 40 cities plan to raise 942000 sets of indemnificatory housing and 2.4 million sets of indemnificatory rental housing nationwide; The renovation of 1.65 million shantytowns and 55600 old urban communities has been started, benefiting 9.65 million households. Fully realize the housing supply side reform. Strive to achieve more than 30% of new prefabricated buildings by 2025. In terms of urban renewal and transformation, we should start from the transformation of old residential areas, waterlogging control, sponge city construction and new urban construction. In 2022, about 20000 kilometers of gas pipelines with potential safety hazards will be reconstructed.
Building materials are expected to record positive earnings during the two sessions: the national two sessions will be held next weekend. We combed the performance of various sub sections of building materials during the two sessions over the years. Building materials rose more or fell less as a whole, and refractories, other building materials and cement products recorded the highest number of years of positive earnings. Considering the uniqueness of this year’s economy and policies, we believe that the building materials sector breeds opportunities. The resumption process at the beginning of the year was relatively slow, and the demand data of rebar, cement and so on were still relatively low. In the context of such a firm policy direction of steady growth, the demand data and stock price of the building materials industry both fell, with large expectation difference. The trough period of the industry is a good opportunity for layout. The two sessions may be the best catalyst. It was at that time that work resumed in the warm spring, and the more prosperous range of building materials came slowly.
Tracking of key sub industries:
Glass: the rigid demand is poor, and the expectation weakens. As of February 25, the average price of the latest glass in China was 245168 yuan / ton, which was basically flat compared with the previous week, and the price stabilized due to the slowdown of demand undertaking. The main force on the demand side switches from replenishment to processing rigid demand. Rigid demand is relatively depressed. The market is dominated by digesting social inventory. The production and sales rate of glass manufacturers is poor, and the willingness to support prices is still strong at this stage. The total inventory of production enterprises in key monitoring provinces is 41.24 million weight boxes, up 3.14 million weight boxes compared with the previous week. The manufacturer’s inventory is at a low level in recent years. The inventory trend in March may indicate the trend of glass price in the whole year. The market demand changes from stock demand to just demand, and it is necessary to pay close attention to the catalysis of processing plant orders on the spot market. Continuing to rise requires the logical catalysis of two main lines: the real demand of the downstream exceeds expectations or the contraction of the supply side, and the market may be dominated in the short term. The completion demand exists objectively, but it needs the improvement of the real estate capital chain. The short-term shock does not change the long business cycle of the glass industry. The annual net profit of the glass leader is expected to remain at a high level, and there is no risk of downward cycle. Continue to focus on recommending Zhuzhou Kibing Group Co.Ltd(601636) , which has entered a new growth period, and the integrated leading Lutheran glass with continuously increasing market share.
Cement: prominent configuration value. As of February 25, 2022, the national average price of cement was 474.33 yuan / ton, up 0.79% month on week and 5.55% 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. In the short term, the performance of the cement sector depends on the expected changes. We believe that the demand for cement will pick up in an all-round way. 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 inventory of enterprises decreased slightly compared with last week, and the average national clinker storage capacity ratio was 54.06%, down 0.91% compared with last week. The operating load of the mill was 14.56%, with a month on month increase of 0.63%. The average price difference between cement and coal in this period was 341.38 yuan / ton, down 0.35% from last week. Compared with the same period last year, the average price difference between cement and coal increased by 1.03%.
Consumer building materials: real estate recovery and valuation repair have been followed from a micro perspective. Real estate sales were quite sluggish in January. We expect that the policy side will still maintain its support for 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. The leading performance is less than expected, triggering a chain reaction to the growth of consumer building materials. We believe that the logic of expanding categories and improving concentration has not changed, and high-quality enterprises with alpha attribute such as Yuhong and Weixing are still scarce varieties. Continue to recommend the leading consumer building materials Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Zhejiang Weixing New Building Materials Co.Ltd(002372) , Dehua Tb New Decoration Material Co.Ltd(002043) , China Liansu.
Market review: as of the closing on February 25, the building materials sector fell 6.5% and the CSI 300 index rose 1.67%. From the perspective of sector ranking, the building materials sector ranked 30th among Shenwan 31 sectors last week, with an increase of – 7.77% year to date, ranking 19th among Shenwan 31 sectors.
The top five stocks with weekly gains: St Yabo, Jinyuan Ep Co.Ltd(000546) , Luoyang Glass Company Limited(600876) , Guangdong Golden Glass Technologies Limited(300093) , Chongqing Sansheng Industrial Co.Ltd(002742) .
The top five weekly declines of individual stocks: Guangdong Kinlong Hardware Products Co.Ltd(002791) , China Railway Prefabricated Construction Co.Ltd(300374) , Keshun Waterproof Technologies Co.Ltd(300737) , Skshu Paint Co.Ltd(603737) , Beijing New Building Materials Public Limited Company(000786) . Investment strategy: focus on recommending Zhejiang Weixing New Building Materials Co.Ltd(002372) , Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Zhuzhou Kibing Group Co.Ltd(601636) , the industry leader Xinyi Glass whose consumption attribute is dominant in building materials, the strong and constant strong Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , the traditional business maintains high prosperity and enters a new growth period at the same time, and the market share continues to increase; It is suggested to pay attention to the leader of engineering plastic pipe and China Liansu and the leader of steel structure Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , which benefit from infrastructure investment, and 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.
