Architectural coatings: consumption of building materials "golden track", leading medium and long-term growth can be expected
In this research report, based on an international perspective, we analyzed the development of the global coating industry and comprehensively and in detail combed mature markets such as the United States and Japan and emerging markets such as China and India. We believe that coatings are still the "golden track" in consumer building materials, China's construction coating industry is in the transition stage from real estate investment driven to real estate investment + old house renovation. There is still a large gap in per capita output compared with developed countries such as the United States, and China's demand still has growth potential. Compared with overseas leaders, China's leading coating enterprises still have much room to improve their market share, but at present Skshu Paint Co.Ltd(603737) , Asia Cuanon Technology (Shanghai) Co.Ltd(603378) have shown certain advantages in channel layout, brand construction and service capacity, and the market share is accelerating. Generally speaking, we believe that with the improvement of the concentration of China's coating industry and the rise of the stock market in the future, China's leading medium and long-term growth period.
Jiantu has a market scale of 100 billion, and the growth of emerging countries is faster
In 2020, the global coating market reached 886.4 billion yuan, of which architectural coating is the largest market segment, accounting for 40%. In terms of subregions, in 2020, the output value of the coating industry in the United States / Japan / India / China will reach 2039 / 363 / 553 / 300 + billion yuan respectively, and the proportion of architectural coatings will reach 52% / 24% / 70% / 29% respectively, which are the most important application fields. In contrast, both the United States and Japan have entered the stock era. From the perspective of China's demand, the market demand for recoating in the United States is better than that in Japan. In recent three years, the output of architectural coatings CAGR has reached 2.3%, while Japan has declined since 16 years, but the income of leading enterprises can still maintain growth through overseas expansion. At present, India and China are still dominated by new construction demand. In recent five years, the CAGR of architectural coatings has reached 10% / 6% respectively, mainly benefiting from the promotion of urbanization. Therefore, the income growth of local enterprises is more driven by Chinese demand.
Benchmarking overseas: China's demand still has growth potential, and the market share of leading coating enterprises has great room to improve
1) Market capacity: in 2020, the per capita output of China State Construction Engineering Corporation Limited(601668) coatings was only 5kg / person, far lower than 8.2kg/person in the United States. However, from the growth trend, the per capita output increased faster. It is expected that the increase of per capita output will drive the continuous growth of architectural coatings output; 2) Demand structure: the driving force for the growth of China's construction coating industry has gradually shifted from real estate investment to real estate investment and old house renovation. It is expected to maintain an industry growth rate of 5% in the 14th Five Year Plan period. 3) Industry trend: in the past 20 years, China's CR10 coating market accounted for only 17%, far lower than the level of more than 90% in the United States and Japan. The future driving factors include accelerating the concentration of downstream real estate developers, accelerating the liquidation of small enterprises under environmental protection + cost pressure, etc. at the same time, the leading companies have obvious advantages in brand and channel construction, which are expected to fully benefit the stock market, and there is still much room for market share improvement.
Make efforts to "brand + channel" construction, and domestic brands catch up from behind
Drawing on the development experience of mature coating market, we believe that in the era of stock housing, "channel + brand" is the core competitiveness, Skshu Paint Co.Ltd(603737) and Yashi have more potential for growth. We believe that the decline of real estate boom has a certain marginal impact on orders, but the public construction and repainting markets are gradually developing, or can hedge the impact of some real estate. Compared with foreign brands, we believe that China's leading coating enterprises are better than foreign enterprises in channel construction, service response speed and service frequency. Compared with other small brands, they have stronger proofing speed, supply guarantee ability and higher brand recognition. We expect the market share to maintain a rapid growth.
Risk tip: the decline of real estate demand exceeds expectations, the rise of raw material prices exceeds expectations, and the industry competition intensifies.
