Market Review
In the five trading days last week (03140318), the market showed a trend of first suppression and then improvement. The building materials (CITIC) index fell 0.33%, the CSI 300 fell 0.94%, and the real estate chain varieties such as glass and consumer building materials performed better in the second half of the week. Among the stocks, Luoyang Northglass Technology Co.Ltd(002613) (38.39%), Ningbo Xianfeng New Material Co.Ltd(300163) (19.30%), Shanghai Yaohua Pilkingyon Glass Group Co.Ltd(600819) (17.12%), Suzhou Yangtze New Materials Co.Ltd(002652) (13.91%), Zhejiang Kaier New Materials Co.Ltd(300234) (12.83%) led the increase.
The bottom of fundamentals + valuation is at a low level. It is recommended to pay attention to the oversold consumption of building materials
Last week, the Finance Committee of the State Council held a meeting, which proposed that real estate enterprises should timely study and put forward effective risk prevention and mitigation solutions, and put forward supporting measures for transformation to a new development model. The Ministry of Finance said that it did not have the conditions to expand the pilot cities of real estate tax reform this year. The CBRC said that it would continue to improve the long-term mechanism of “stabilizing land prices, house prices and expectations”, Actively promote the transformation of the development mode of the real estate industry, focus on supporting high-quality real estate enterprises to merge and acquire high-quality projects of difficult real estate enterprises, and welcome the confirmation of the improvement of real estate policies.
In the first 18 days of March, the sales area of commercial houses in 30 cities decreased by 49.3% year-on-year, and the decline was further expanded. However, we believe that this may also be related to the national epidemic spread in March. We believe that with the easing of the epidemic and the continuous development of policies, the growth rate of sales area of new houses and second-hand houses is expected to pick up, and the delivery end of consumer building materials is expected to hit the bottom and rebound. The current pressure on the cost side is still high, but under the background of the decline of oil price, coal price and gas price, the worst time is expected to be over.
At present, the valuation quantile value of most first-line consumer building materials varieties has been at or below 50% after 2017, while the valuation quantile of second-line varieties has fallen to the bottom range. If considering that the consumer building materials companies generally made significant provision for impairment last year, which has a certain impact on PE (TTM), we believe that the current valuation of major consumer building materials companies is lower than the value reflected. The relatively low valuation level has created conditions for the rebound, and the policy is expected to become the catalyst for the rebound of the sector. If the fundamentals of subsequent consumer building materials delivery and cost side show an improvement trend, we believe that the sustainability of the rebound market is expected to be stronger.
Continue to be optimistic about stable growth and fundamental reversal, and recommend the consumption of building materials / pipelines / cement, etc
1) influenced by the prosperity of real estate, capital chain and cost pressure last year, the above factors are expected to gradually improve. In the medium and long term, the leading companies have started channel reform, and the scale effect is expected to continuously improve the industry concentration, both long and short; 2) The downstream of the plastic pipeline sector has both infrastructure and real estate. The infrastructure end is expected to benefit from the warming of municipal pipe network investment, and the logic of the real estate end is similar to that of consumer building materials;
3) cement is expected to benefit from the improvement of subsequent infrastructure and real estate demand. In the medium and long term, the supply pattern is expected to be continuously optimized; 4) At present, the market value of the leading glass enterprises is at a low level. At present, they are in the period of accelerated resumption of work in spring, and the glass price is expected to gradually rise. This year, the overall supply and demand of the industry may still be in a tight balance, the unit profit of float glass is expected to be relatively stable, photovoltaic glass is expected to benefit from the recovery of the industrial chain, and electronic glass is expected to benefit from the large volume of new products such as domestic substitutes and folding screens; 5) The demand side of glass fiber is driven by the downstream of wind power and overseas, and the increment on the supply side is limited.
Investment advice
Recommendations for consumer building materials Monalisa Group Co.Ltd(002918) , Dehua Tb New Decoration Material Co.Ltd(002043) , Zhejiang Weixing New Building Materials Co.Ltd(002372) , Beijing New Building Materials Public Limited Company(000786) , Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , etc; The pipeline recommends China Liansu, Shandong Donghong Pipe Industry Co.Ltd(603856) , ad shares, etc; Cement recommendations Gansu Shangfeng Cement Co.Ltd(000672) , Huaxin Cement Co.Ltd(600801) , Anhui Conch Cement Company Limited(600585) , Jiangxi Wannianqing Cement Co.Ltd(000789) ; Glass recommended Triumph Science & Technology Co.Ltd(600552) , Zhuzhou Kibing Group Co.Ltd(601636) , Xinyi Glass, etc; Glass fiber recommendation China Jushi Co.Ltd(600176) , Sinoma Science & Technology Co.Ltd(002080) etc;
Risk tip: the demand for infrastructure and real estate fell more than expected, affecting the rising trend of cement and glass prices; The promotion of old reform and new urbanization was less than expected.
