Investment summary:
Talk every Monday: performance of building materials sector after repeated RRR reduction
The RRR reduction is not an immediate rebound signal, but it points out the direction in the longer-term dimension. After lengthening the time line, the excess return of building materials is more obvious. Five of the previous comprehensive RRR reductions were made in the context of the decline of real estate:
Two comprehensive RRR reductions in 2008: in November, the sales area decreased by 16.5% year-on-year, and gradually returned to positive growth in March 2009.
In 2012, the reserve requirement was comprehensively reduced twice: the real estate sales area increased by 14% in the first year, and returned to positive in November of that year.
Four comprehensive RRR reductions in 2015: since 14 years, real estate has faced great downward pressure, and sales have gradually stabilized and increased in June 2015.
Two comprehensive RRR reductions in 2019: the overall pressure on the real estate is not large, and the operation is stable and weak. RRR reduction is the work measure of "six stabilities".
Two comprehensive RRR reductions in 2021: the current round of real estate downturn continues.
The building materials index has no obvious excess return within three weeks after the standard reduction. The average rise and fall of the building materials index relative to the CSI 300 is close to 0, and the winning rate is maintained at about 50%. If the time line is prolonged, building materials will obtain higher certainty of excess returns after the RRR reduction. After the RRR reduction in February, it increased by an average of 4.8% relative to the CSI 300, and 13 of the 18 RRR reductions achieved outperformance over the CSI 300 after February Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) has experienced 18 comprehensive RRR reductions after listing, of which only 8 times outperformed CSI 300 within 3 weeks of the announcement of RRR reduction. However, after the RRR reduction announcement in January and February, Yuhong outperformed Shanghai and Shenzhen 300 times, increasing to 11 times Zhejiang Weixing New Building Materials Co.Ltd(002372) share price performance is close to the building materials index after excluding its own alpha factor.
We believe that under the macro background of stabilizing investment and real estate this year, the effect of RRR reduction on the building materials sector is closer to 2008 and 2012, and the leader is expected to usher in continuous valuation repair. At the beginning of this year, the decline of real estate sales was second only to 2008, 2012 and 2015, and the restoration of confidence is imminent. After 2008 and 2012, the building materials sector ran out of obvious excess returns after the RRR reduction. At the beginning of 2022, the real estate continued to decline, but the policy direction to promote the virtuous cycle development of real estate is very clear. We are optimistic about the valuation and repair opportunities of building materials.
Tracking of key sub industries:
Glass: prices are falling under pressure. As of March 18, the average price of the latest glass in China was 216847 yuan / ton, down 7.66% from the previous week. The demand recovery is relatively slow, and the new orders of downstream processing plants are still relatively limited. The short-term inventory is difficult to improve significantly, and the manufacturer is still willing to support the price at this stage. The total inventory of production enterprises in key monitoring provinces was 53.72 million weight boxes, an increase of 3 million weight boxes or 5.91% over the previous week. The expected resumption of price rise requires the logical catalysis of two main lines: the real demand of the downstream exceeds the expectation or the contraction of the supply side, and the market may be dominated in the short term. The completion demand exists objectively, but it needs the improvement of the real estate capital chain. Last week, the average net profit of the industry fluctuated and fell, but the short-term shock did not change the long business cycle of the glass industry. We continue to focus on recommending Zhuzhou Kibing Group Co.Ltd(601636) , an integrated leader with an increasing market share, Xinyi Glass, which has entered a new growth period.
Cement: in the medium and short term of demand recovery, pay attention to the squeeze of coal price on profits. As of March 18, the national average price of cement was 455.55 yuan / ton, up 0.76% from last week. Market demand and supply side production are also recovering. In the short term, the performance of the cement sector depends on the expected changes. We believe that the demand for cement will pick up in an all-round way. The inventory of enterprises increased compared with last week, and the average national clinker storage capacity ratio was 50.61%, an increase of 1.58 PCTs compared with last week. The operating load of the mill was 46.23%, up 6.25 PCTs month on month. The average price difference between cement and coal in this period was 291.9 yuan / ton, up 20.74% from last Thursday. Compared with the same period last year, the average price difference between cement and coal fell by 11.39%.
Consumer building materials: due to the wind of real estate recovery and valuation repair, real estate sales were quite sluggish from January to February, and the decline of residents' medium and long-term loans in social finance data was verified again. We expect that the policy side will continue to support the real estate recovery, and pay attention to the cities that follow the policy of entering and leaving Taiwan after Zhengzhou. After the industry impairment crisis, the emphasis on business quality will slightly loosen the accelerator of growth. The leading performance is less than expected, triggering a chain reaction to the growth of consumer building materials. We believe that the logic of expanding categories and improving concentration has not changed, and high-quality enterprises with alpha attribute such as Yuhong and Weixing are still scarce varieties. Continue to recommend the leading consumer building materials Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Zhejiang Weixing New Building Materials Co.Ltd(002372) , Dehua Tb New Decoration Material Co.Ltd(002043) , China Liansu.
Market review: as of the closing on March 18, the building materials sector fell 0.16% and the CSI 300 index fell 0.94%. From the perspective of sector ranking, the building materials sector ranked sixth among Shenwan 31 sectors last week, with an increase of - 13.43% year to date, and ranked 18th among Shenwan 31 sectors.
Top five gainers of individual stocks: Jiangsu Jingxue Insulation Technology Co.Ltd(301010) , Luoyang Northglass Technology Co.Ltd(002613) , Shanghai Yaohua Pilkingyon Glass Group Co.Ltd(600819) , Suzhou Yangtze New Materials Co.Ltd(002652) , Zhejiang Kaier New Materials Co.Ltd(300234) .
Top five stocks with declines: Jinyuan Ep Co.Ltd(000546) , Huaxin Cement Co.Ltd(600801) , Ruitai Materials Technology Co.Ltd(002066) , Chongqing Sansheng Industrial Co.Ltd(002742) , Sinostone(Guangdong) Co.Ltd(001212) . Investment strategy: focus on recommending Zhejiang Weixing New Building Materials Co.Ltd(002372) , the strong and strong Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , the steel structure leader Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , the traditional business maintaining high prosperity while entering a new growth period, and the industry leader Xinyi Glass with continuously improving market share; It is suggested to pay attention to China Liansu, the leader of engineering plastic pipe benefiting from infrastructure investment, and recommend the cement sector with underestimated value and high dividend under the expectation of steady growth.
Risk tip: the demand of real estate chain declines, infrastructure investment slows down, and the price of raw materials fluctuates.
