Report summary:
Building materials index fell slightly, but still outperformed Shanghai and Shenzhen 300. The building materials sector fell 0.9% this week, outperforming the CSI 300 index by 1.0 percentage points. We believe that the main reasons for the decline of the sector this week are: 1) the overall downward trend of real estate showed an accelerated trend in February, and it still takes time for the sector to transmit from the bottom of policy to the bottom of fundamentals; 2) the international political situation has further increased the prices of stone oil, natural gas and other raw materials, The profits of some material companies were further squeezed.
The two sessions expressed a positive attitude towards steady growth, benefiting the fields or core areas of water conservancy, gas pipe network and underground pipe gallery. The two sessions were held this week, the government work report was released, and the attitude towards steady growth was positive:
1) the annual GDP growth target is 5.5%, which reflects the great determination to stabilize growth. Moreover, the work report mentions "moderately ahead of schedule infrastructure investment", and the overall statement of stable growth of infrastructure is relatively positive;
2) at the capital level, it is proposed that the expenditure at the central level will increase by 3.9%, the scale of special bonds of local governments will be 3.65 trillion, and the fiscal expenditure will be more than 2 trillion more than that in 2021. At the capital level, it will provide greater support for steady growth;
3) from the perspective of subdivision direction, in the broad infrastructure investment, the expression order of water conservancy and gas pipeline network is significantly ahead of schedule. At the same time, compared with the new underground pipe gallery content in the 2021 work report, the relevant infrastructure may start to speed up from 2022. Among the material companies, the plastic pipe industry benefited, while among the construction enterprises, water conservancy consulting enterprises Shenzhen Water Planning & Design Institute Co.Ltd(301038) and surveying and mapping enterprises Nanjing Research Institute Of Surveying Mapping & Geotechnical Investigation Co.Ltd(300826) , Zhengyuan Geomatics Group Co.Ltd(688509) and other industries benefited;
4) the two sessions proposed to "start rebuilding a number of old urban communities, and carry out the investigation and rectification of potential safety hazards of old buildings and facilities". The intensity of old reconstruction in the whole year may still be higher than that in 2021 (56000 communities under construction). Building materials related to structural transformation, such as waterproof, pipe, glass, etc;
The price rise of photovoltaic glass driven by cost still needs to pay attention to the cost advantage throughout the year. According to Zhuo Chuang information, due to the rising costs of soda ash and natural gas and the compression of profit space of glass manufacturers this week, some small and medium-sized enterprises have begun to push up prices ranging from 0.5-1.5 yuan / m2. However, due to the ignition of some production lines in the early stage, the supply has increased, and the downward transmission of cost pressure from downstream component manufacturers is not smooth, the implementation of the new price has not been finalized. We believe that the demand for photovoltaic glass in the whole year is still strong, but the expansion plan of the head enterprise is relatively strong. Xinyi solar energy proposed in the performance announcement on February 28 that it is expected to add 8 production lines with daily melting capacity of 1000 tons in the whole year, and Flat Glass Group Co.Ltd(601865) 3 announced on March 3 that it will invest in the construction of 6 production lines with daily melting capacity of 1200 tons. Therefore, there is still a certain pressure on the price in the whole year, However, with the expansion of the average production line of the head enterprise, its cost advantage may be further consolidated, and the logic of volume increase is clear. Therefore, the growth of head photovoltaic glass enterprises with cost advantages is expected to remain good. Recommend Shandong Jinjing Science And Technology Stock Co.Ltd(600586) , which has advantages of soda ash, natural gas and labor cost; Xinyi solar energy, Flat Glass Group Co.Ltd(601865) , Zhuzhou Kibing Group Co.Ltd(601636) , Csg Holding Co.Ltd(000012) , Luoyang Glass Company Limited(600876) and other industries benefited.
Risk tips
Demand is lower than expected, cost is higher than expected, systemic risk
