Talk every Monday: Coatings: the upstream and downstream of the pressure bearing midstream industry are expected to improve
Coating industry: the industry is in the darkest hour, the downturn of downstream real estate makes the demand less ideal, and the cost of upstream raw materials is at an all-time high. The industry structure is highly fragmented. In 2020, the main business income of the coating industry was 305434 billion yuan, and the main listed companies Skshu Paint Co.Ltd(603737) , Asia Cuanon Technology (Shanghai) Co.Ltd(603378) accounted for only 2.68% and 1.15%. Overseas enterprises occupy the main market and domestic players are rising. From the perspective of revenue scale and brand image, overseas brands such as Nippon and Dulux have great advantages, and domestic players still have a large space to catch up and grow.
Pay equal attention to the construction and reconstruction of downstream demand side buildings: the revenue growth center of coating listed enterprises is more than 20%, and the fluctuation direction resonates with the real estate cycle. The fluctuation of revenue growth lags behind the new construction of real estate for 2-5 quarters and 1-2 quarters ahead of the completion of real estate. In addition to the demand for new construction, coatings may be the most robust building materials in the era of stock housing, with a long life cycle. In 2021, the number of old residential areas will reach 53000, in addition to the indoor transformation of existing houses, and the long-term demand will remain high.
The price of upstream raw materials fluctuates greatly: Taking Skshu Paint Co.Ltd(603737) as an example, the cost of raw materials accounts for more than 83% of the total cost. The price change of raw materials has a great impact on the profitability of enterprises. Among the raw materials, the proportion of pigments and fillers and emulsions is relatively high from the unit consumption. The amount of latex, pigments, fillers and auxiliaries procurement ranks the top three in terms of value. Latex, toluene and other raw materials are Petrochemical downstream products, the price is more obvious impact on oil prices, affected by the continuous rise in crude oil prices, Skshu Paint Co.Ltd(603737) first three quarters of the purchase price of emulsions rose 41%, titanium dioxide prices increased by 51%, the cost of raw materials for unit products is about 2480 yuan / ton, the overall pressure is greater. There is still great pressure on the cost side in 2022. Under the optimistic assumption, the raw material cost per unit product is 2836 yuan / ton, while under the pessimistic assumption, the raw material cost per unit product can reach 3237 yuan / ton, an increase of 31%.
Tracking of key sub industries:
Glass: demand recovers, inventory turns down, and the short-term bottom has appeared. As of April 1, the average price of the latest glass in China was 205289 yuan / ton, down 1.96% from the previous week. The demand recovery is relatively slow compared with previous years. The new orders of downstream processing plants are general. It coincides with the Qingming Festival holiday. There are small rise plans in some regions, mainly in the case of just needed replenishment. The total inventory of production enterprises in key monitoring provinces was 56.24 million weight boxes, a decrease of 210000 weight boxes compared with last week, a decrease of 0.37%. Inventory reduction occurred for the first time. 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 industry net profit fluctuated and fell to a low level. The prices of manufacturers in some regions have been close to the cost line, and the willingness to further reduce prices under cost pressure is not strong. The short-term shock will not change the long business cycle of the glass industry, and we will continue to focus on recommending Zhuzhou Kibing Group Co.Ltd(601636) , an integrated leading Lutheran glass with continuously increasing market share, which has entered a new growth period.
Cement: the price has fallen, and the demand recovery is slower than in previous years. As of April 1, the national average price of cement was 454.99 yuan / ton, down 0.39% from last week. The cement price will gradually stabilize and the supply will gradually recover, but the demand growth will slow down and the space for price rise will be reduced. The inventory of enterprises increased compared with last week, and the average national clinker storage capacity ratio was 59.06%, up 3.37 PCTs compared with last week. The operating load of the mill was 42.98%, down 0.88 PCTs month on month. The average price difference between cement and coal in this period was 303.82 yuan / ton, up 11.23% from last Thursday. Compared with the same period last year, the average price difference between cement and coal fell by 8.11%.
Consumer building materials: the periodic rebound window has appeared. The downward superposition of crude oil prices and the lifting of real estate purchase restrictions in many places have led to a rapid rebound in consumer building materials. It is expected that the overall rebound will last until the disclosure of the first quarterly report. The performance is still in the bottom period, and the differentiation situation in the industry is still continuing. We suggest to select waterproof and pipe leaders with more deterministic performance. After the industry impairment crisis, the emphasis on business quality will slightly loosen the accelerator of growth. However, we believe that the logic of category expansion and concentration improvement has not changed. High quality enterprises with alpha attributes such as Yuhong and Weixing are still scarce varieties, and the rise of cost side is only a short-term disturbance. Continue to recommend Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Zhejiang Weixing New Building Materials Co.Ltd(002372) .
Market review: as of the closing on April 1, the building materials sector rose 6.29% and the CSI 300 index rose 1.24%. From the perspective of sector ranking, the building materials sector ranked second among Shenwan 31 sectors last week, with an increase of – 11.41% year to date, and ranked 14th among Shenwan 31 sectors.
Top five gainers of individual stocks: Xiamen Wanli Stone Stock Co.Ltd(002785) , Shenzhen Universe (Group) Co.Ltd(000023) , Hainan Ruize New Building Material Co.Ltd(002596) , Skshu Paint Co.Ltd(603737) , Lets Holdings Group Co.Ltd(002398) .
The top five stocks with declines: Luoyang Northglass Technology Co.Ltd(002613) , Luoyang Glass Company Limited(600876) , Shanghai Yaohua Pilkingyon Glass Group Co.Ltd(600819) , Jiangsu Jingxue Insulation Technology Co.Ltd(301010) , Zhengwei new material.
Investment strategy: focus on recommending Zhejiang Weixing New Building Materials Co.Ltd(002372) , Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , steel structure leader Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Zhuzhou Kibing Group Co.Ltd(601636) , traditional business maintaining high prosperity and entering a new growth period, and Xinyi Glass, the industry leader with continuously improving market share; It is suggested to pay attention to the sector leader Dehua Tb New Decoration Material Co.Ltd(002043) .
Risk tip: the demand of real estate chain declines, infrastructure investment slows down, and the price of raw materials fluctuates.
