Key investment points:
From January to November 2021, the trend of building decoration and building materials sector is divided. The architectural decoration sector has outperformed the market since the beginning of the year, with a cumulative increase of 7.95% as of November 30, outperforming the Shanghai and Shenzhen 300 index by 15.23pct; The building materials sector increased by - 7.12%, underperforming the CSI 300 index by 0.07pct. The valuation of the building decoration sector is at a historically low level. We believe that under the background of the downward pressure of the economy, steady growth and expanding domestic demand are still the focus of the policy. The countercyclical adjustment demand of infrastructure may continue to be strengthened, and the valuation level of buildings may have some room for repair.
The traditional investment demand is generally stable, and the cost side pressure is expected to be relieved. 1) The downward pressure on the economy still exists, the investment data continued to be weak in November, and the manufacturing industry improved significantly. 2) Infrastructure: since the third quarter, the policy has continued to add weight to the steady growth, and it will take time for the physical quantity to form. It is expected that the growth rate of infrastructure investment in 2021q4 is still at the bottom. But at the same time, the capital side has obviously warmed up. From the project side, the PMI of the construction industry continues to improve and the outlook of the construction industry is good. We are optimistic about the recovery of infrastructure investment in the first half of next year. 3) Real estate: since this year, real estate has been continuously affected by policy tightening, the sales end has slowed down significantly, and new construction has continued to decline. With the recent improvement of real estate financing and centralized land supply threshold, the capital situation of the real estate chain is expected to be gradually alleviated. We expect that under the policy tone of no speculation in real estate and the determination of industry deleveraging, the overall real estate investment will still be under pressure in 2022. The completed end is expected to continue to be repaired. 4) Cost side: with the relative decline in the prices of coal, soda ash and crude oil, we believe that the subsequent impact on the cost of relevant building materials is gradually weakening, especially the consumer building materials downstream of the industrial chain.
Policies promote new demands such as new infrastructure and new construction models. The central economic work conference in December pointed out that infrastructure investment should be carried out moderately ahead of schedule, and key areas and weak links should become the starting point. New infrastructure construction, old transformation and infrastructure construction in major fields will be the main focus, covering transportation infrastructure, water conservancy, energy, environmental protection, urban pipe network and other fields. Under the goal of "carbon neutralization", the proportion of new energy targets has increased, giving birth to investment needs such as wind and photovoltaic. The State Council has issued the action plan for reaching the carbon peak by 2030. By 2025, the renewable energy substitution rate of urban buildings will reach 8%, and the roof photovoltaic coverage rate of new public institution buildings and new factories will strive to reach 50%. With the vigorous promotion of distributed photovoltaic, with the continuous improvement of BIPV economy, its industry is expected to accelerate its development. The construction of smart grid at the distribution end and the related requirements at the energy storage end came into being. The low-carbon model of the construction industry itself is also particularly important. The production and construction links should meet the "green building" standard.
Investment strategy: focus on the new extension of construction and building materials industry chain under the background of double carbon. 1) Power engineering enterprises are familiar with all aspects of power project construction, have strong resource integration ability, and some central enterprises and state-owned enterprises have strong financial strength. With the advantages of industrial chain integrating investment, design, construction and operation, in addition to obtaining orders for new energy power projects, they have great potential to enter the new energy power investment and operation market. In terms of BIPV, leading companies in other subdivided fields (steel structure and building envelope) also rely on their own advantages of architectural design and construction integration and customer resources to layout BIPV business and carry out business cooperation with new energy companies. 2) Under the background of accelerating the realization of carbon peak in iron and steel / nonferrous metals / petrochemical and chemical / building materials industries, the leader of metallurgical engineering has the first mover advantage in the field of low-carbon technological transformation; For building materials enterprises, after the fall of energy consumption double control, the production capacity is expected to further accelerate the clearing, and the industry pattern is optimized. 3) The first green building is prefabricated decoration and steel structure. The penetration rate of prefabricated buildings is expected to exceed 30% in 2025; At present, the permeability of steel structure is about 5%, and the permeability is increased to 10-15% in the 14th five year plan. Assembly leading enterprises will have obvious competitive advantages; Steel structure manufacturers and general contractors have their own characteristics. 4) The implementation of the "double carbon" initiative has gradually deepened, and building materials have also spawned new demand for downstream segmentation. The growth prospect is worthy of attention. Pay attention to the new downstream demand of photovoltaic glass, glass fiber and ceramic fiber in the medium and long term.
Risk warning: infrastructure investment is less than expected risk; Risk of tighter financing environment; Slow order promotion and risk of performance not meeting expectations; Risk of sharp rise in raw material costs; Policy implementation is less than expected risk
