Consumption of building materials, high-quality track, new materials into new growth
Waterproof material is an important part of building functional materials. In building construction, waterproof materials form an integral waterproof layer on the surface of the building to achieve waterproof or enhance the ability of anti leakage. Therefore, its quality and application effect are directly related to the structural effect and service life of building engineering. Under the background of “double carbon”, new waterproof materials such as synthetic polymer waterproof roll usher in development opportunities. The substitution of new modified asphalt waterproof materials, TPO waterproof coiled materials and other polymer waterproof materials for traditional waterproof materials has become the development trend of the industry. The progress of waterproof technology and the market demand for green environmental protection of buildings provide strong conditions for waterproof to enter the combination of green building and photovoltaic building industry. Photovoltaic roof waterproof is expected to become a new growth pole. In 2021, the waterproof industry will move forward under pressure and achieve contrarian growth. According to the statistics of China State Construction Engineering Corporation Limited(601668) waterproof Association, in 2021, the total revenue of waterproof Enterprises above national scale (with main business income of more than 20 million yuan) was 126159 billion yuan, a year-on-year increase of 13.20%; The total profit was 7.564 billion yuan, a year-on-year increase of 2.04%.
The incremental market is resilient and the space for building repair is broad
The real estate fundamentals are expected to stabilize in 2022, and the waterproof demand at the real estate end will stabilize accordingly. The tone of “steady growth” continues to be clear, and infrastructure is an important starting point for underpinning the economy. The acceleration of infrastructure construction represented by municipal engineering plays a strong support for the demand of waterproof at the infrastructure end. In 2022, the construction of municipal engineering projects supported by the state, such as sponge City, urban three-dimensional transportation network, underground comprehensive pipe gallery and other municipal engineering projects, has high waterproof unit consumption. It is expected that the increase in the scale of municipal engineering infrastructure construction such as underground comprehensive pipe gallery in 2022 will significantly boost the waterproof demand at the infrastructure end.
As the existing buildings enter the peak of renovation and maintenance, the renovation of existing houses is expected to become an important driving force for the waterproof market demand in the future. We estimate that during the 14th Five Year Plan period, the waterproof demand that can be driven by the transformation of old residential areas will exceed 300 billion yuan. In addition, this demand space only considers the basic old transformation and waterproof works. If all old transformation projects are considered, the demand for waterproof will be greater. We estimate that the market space of the waterproof industry from 2022 to 2025 will be about 2003 / 2053 / 2094 / 213.6 billion yuan, with a year-on-year increase of 3.0% / 2.5% / 2.0% / 2.0% respectively, maintaining a high and moderate growth.
With the acceleration of integration and clearing, waterproof head enterprises are expected to continue to benefit
According to the statistics of China State Construction Engineering Corporation Limited(601668) waterproof Association, the number of waterproof Enterprises above designated size was 839 in 2021, an increase of 116 compared with 2020. We believe that in the future, the backward production capacity of the industry represented by enterprises below designated size will be cleared faster, and enterprises above Designated Size will seize the market share. The proportion of their revenue is expected to continue to increase, showing a development pattern in which the strong are always strong.
In terms of the ratio of the operating income of the main listed companies in the waterproof industry ( Beijing New Building Materials Public Limited Company(000786) , Skshu Paint Co.Ltd(603737) ) as waterproof business) to the main business income of waterproof Enterprises above Designated Size, in 2020, CR3 in the waterproof industry ( Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Keshun Waterproof Technologies Co.Ltd(300737) , Jiangsu Canlon Building Materials Co.Ltd(300715) ) was 27.58%, with a year-on-year increase of 3.37pct, of which Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) accounted for 20%; In addition to Beijing New Building Materials Public Limited Company(000786) and Skshu Paint Co.Ltd(603737) waterproof, the Cr5 of waterproof industry was 31.45%, with a year-on-year increase of 6.63pct.
At present, the waterproof industry has gradually entered the period of incremental stock transfer. At this stage, the high-quality growth of enterprises will be more critical. Enterprises with advantages in profit quality and operation efficiency will be able to cross the cycle and better face the future stock market game. At this time, the enterprises that achieve report improvement while increasing their performance may show that their strategy is ahead of their competitors and has a significant moat.
Investment advice
Waterproof is a high-quality track in consumer building materials, with a market scale of more than 100 billion. In the short term, the growth of infrastructure demand brought by the strengthening of “steady growth” and the waterproof demand brought by the transformation of old residential areas and urban renewal will support the steady development of the industry; The price of raw materials rose, the withdrawal of small and medium-sized enterprises accelerated, and the process of improving industry concentration accelerated. In the medium and long term, the improvement of building warranty period, BIPV photovoltaic roof and other new application scenarios will promote the upgrading of product quality and the proportion of high-end products in the industry. The resulting market space expansion bonus is more occupied by the head enterprises.
At present, the valuation level of major listed companies in the waterproof industry has been in a low position after the early in-depth correction. It is suggested to pay attention to the leader of high-quality growth in the waterproof industry.
Key recommendation Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , the company is the first A-share listed company in the waterproof industry. Compared with the main catchers, it has significant advantages in scale and is the absolute leader in the waterproof industry. We believe that the highlights of the company are mainly reflected in:
1) during the tightening period of credit environment, the company took advantage of the capital market to refinance, seized the opportunity of industry reform, and occupied a favorable position in the market environment of b-end major customers and increasingly important national layout;
2) since 2020, the company has strengthened the assessment of cash collection and gradually optimized the debt structure; Under the adversity of real estate risk exposure in 2021, the company has shown a significantly better anti risk ability than its peers;
3) the new business has huge growth space, and the waterproof repair market will reach 100 billion every year. Several types of key new products cultivated by the company, architectural coatings, thermal insulation materials and mortar, each have a large market of 10 billion or even 100 billion. The courage and pattern shown in the development process of the company have great enterprise potential, and the growth space is far from the top.
Risk tips
The growth rate of infrastructure and real estate investment has decreased significantly, which is at risk; The price of asphalt and other raw materials continued to rise, exceeding expectations; The industry competition intensifies and the market concentration increases less than expected; Bad debt risk of accounts receivable.
