Investment summary:
Talk every Monday: what is the investment scale of major projects?
Foreign media misread the scale of infrastructure investment: on April 7, Bloomberg reported that China will launch a $2.3 trillion infrastructure investment plan to detonate the building materials sector. The data obtained by foreign media are not accurate. We have sorted out the 22 provincial administrative regions that have published the list of major projects, and the total planned investment in 2022 exceeds 9.42 trillion. It is estimated that the total annual planned investment can exceed 12 trillion after all 34 provinces and regions are published.
Major project construction supervision is the key to steady growth, and the annual growth rate of major project investment is expected to exceed 7.92%. Local governments usually publish the list of major projects at the beginning of the year and establish an overall coordination mechanism for main leaders to realize the rapid promotion of major projects. Major projects include not only infrastructure and livelihood projects invested by the government, but also industrial projects invested by state-owned enterprises and private enterprises, covering all projects with a certain amount of investment in the region and prominent social and economic importance. By excluding some areas where the data are not available, which makes it impossible to calculate the year-on-year growth, we preliminarily conclude that the planned investment in major projects in 2022 will increase by 7.92% year-on-year, indicating that the investment in fixed assets will maintain a high growth rate.
From the perspective of investment orientation, industrial projects are the key direction. We suggest paying attention to the investment opportunities in the manufacturing investment industry chain. Industrial projects in Fujian province accounted for 39.45%; The annual planned investment of industrial engineering in Guangdong Province accounts for 31.7%; Industrial projects in Hunan province accounted for 57.61%.
The landscape of the construction industry chain is expected to be gradually transmitted. There are left layout opportunities in the middle and upper reaches, and the expectation difference of the steel structure industry is the largest. Affected by the epidemic in some areas, economic growth is weak, and the importance of steady growth is prominent. The high prosperity of the industry is first reflected in the newly signed contract amount of general contracting enterprises. The newly signed contract amount of the representative enterprises China Railway Group Limited(601390) in the first quarter increased by 84% year-on-year, and then gradually transmitted to the midstream industry according to the prosperity of construction progress, with waterproof, cement and steel structures benefiting first. At present, the steel structure industry has the largest expected difference, and the high growth rate has not been reflected. In addition, it will fully benefit from manufacturing investment.
Tracking of key sub industries:
Glass: demand recovers, inventory fluctuates, and the short-term bottom has appeared. By April 8, the average price of the latest glass in China was 204183 yuan / ton, down 0.68% from the previous week, and the decline continued to slow down. The demand recovery was relatively slow compared with previous years, and there was no significant improvement in the new orders of downstream processing plants. After a wave of replenishment in some areas during the Qingming holiday, the shipment slowed down. The total inventory of production enterprises in key monitoring provinces was 57.73 million weight boxes, an increase of 890000 weight boxes or 1.58% 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 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: there is still pressure on the fundamentals, focusing on emotional allocation opportunities. As of April 8, 2022, the average price of cement nationwide was 472 yuan / ton, down 0.86% from last week. Cement prices will continue to fall, demand growth is less than expected, and supply pressure will gradually increase. The clinker inventory continued to grow this week, with the national average clinker storage capacity ratio of 62.65%, up 3.59 PCTs compared with last week. The mill operating load was 45.62%, up 2.64 PCTs from last week. The average price difference between cement and coal in this period was 292.36 yuan / ton, down 3.77% from last Thursday. Compared with the same period last year, the average price difference between cement and coal fell by 12%.
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 8, the building materials sector rose 3.93% and the CSI 300 index fell 1.06%. From the perspective of sector ranking, the building materials sector ranked third among Shenwan 31 sectors last week, with an increase of – 7.93% year to date, and ranked 10th among Shenwan 31 sectors.
Top five gainers of individual stocks: Hainan Ruize New Building Material Co.Ltd(002596) , Ningbo Fuda Company Limited(600724) , Guangdong Sanhe Pile Co.Ltd(003037) , Xinjiang Qingsong Building Materials And Chemicals(Group)Co.Ltd(600425) , Sichuan Golden Summit (Group) Joint-Stock Co.Ltd(600678) .
Top five stocks with declines: Luoyang Northglass Technology Co.Ltd(002613) , Lets Holdings Group Co.Ltd(002398) , Guangdong Golden Glass Technologies Limited(300093) , ST Yabo and Zhengwei new material. Investment strategy: in the chain of steady growth, focus on recommending the strong and constant Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , and the steel structure leader Anhui Honglu Steel Construction(Group) Co.Ltd(002541) ; Zhejiang Weixing New Building Materials Co.Ltd(002372) , the leading consumer in building materials, and Dehua Tb New Decoration Material Co.Ltd(002043) , the leader in sector industry with steady performance growth, are the first to be promoted in real estate recovery; New materials recommends that traditional businesses maintain high prosperity and enter a new growth period Zhuzhou Kibing Group Co.Ltd(601636) .
Risk tip: the demand of real estate chain declines, infrastructure investment slows down, and the price of raw materials fluctuates.
