The construction and building materials index significantly underperformed the sector this week. This week, the building materials index fell by 5.1% and the construction index fell by 5.0%, respectively 4.1 / 4.0 percentage points lower than the CSI 300 index. We believe that the main reasons for the sector's outperformance this week are: 1) the sector rose significantly last week, and some investors took profits; 2) the epidemic control in some key cities, and the local demand for construction and building materials weakened significantly; 3) the net profit of some key building materials companies in the first quarter fell significantly, In the weak market, the stock price is easy to make a large correction.
Supported by government bonds, social finance and credit exceeded expectations, and the structure still needs to be improved. According to the financial data released by the state this week, social finance increased by 4.65 trillion yuan in March, exceeding market expectations (wind unanimously expected 3.63 trillion yuan), and the growth rate of stock social finance increased by 10.6%, 0.4 percentage points higher than that from January to February; In March, the new loan was 3.13 trillion yuan, also exceeding the market expectation (wind unanimously expected 2.64 trillion yuan). In terms of breakdown structure, the main factor for social finance exceeding expectations is the large-scale issuance of local government bonds. According to wind data, local governments added 420.5 billion yuan of special bonds in March, significantly ahead of last year; The demand on the consumer side is still weak. In March, residents' short-term loans were 384.8 billion yuan, a year-on-year decrease of about 140 billion yuan, and medium and long-term loans were 373.5 billion yuan, a year-on-year decrease of about 250 billion yuan, reflecting that residents' daily consumption and house purchase demand are still weak, which further confirms that it will take time for real estate to change from "policy bottom" to "Fundamentals bottom". In March, corporate loans amounted to 24800 yuan, with a year-on-year increase of about 880 billion yuan, but the overall short-term loans and bills were dominated, and medium and long-term loans amounted to 13400 yuan, which was basically the same year-on-year, indicating that the willingness of most enterprises to capital expenditure is still limited. In the context of strong total financial data but weak structure, we expect that value stocks will still be more popular in the short term, and the main line of steady growth still has good allocation value.
The central bank lowered the reserve requirement by 25 basis points, and the follow-up countercyclical policy may continue to follow, but it still needs to choose the target with clear growth logic. After the national standing committee meeting mentioned the use of financial instruments to stabilize economic growth on April 13, the central bank announced on April 15 that it would reduce the deposit reserve ratio by 0.25 percentage points from April 25. In the subsequent question and answer session, relevant people of the central bank said that they expected to release 530 billion yuan of liquidity. We believe that the central bank's RRR reduction sends a signal of steady growth and helps stabilize market expectations. We have analyzed the performance of the building materials sector after the central bank's RRR reduction seven times since 2019. Generally speaking, after the central bank announced the RRR reduction, the building materials sector can generally achieve excess returns compared with the CSI 300 in both the short-term dimension (one week) and the medium-term dimension (one quarter), while the construction sector is difficult to outperform the market in the medium-term dimension. We believe that the main factor is in 20192021, Most head building materials enterprises have shown good market share improvement and category expansion logic (such as head consumption building materials enterprises) or rising industry prosperity (such as glass and glass fiber), while relatively few enterprises in the construction sector meet the above conditions. Therefore, we expect to follow up with counter cyclical policies in the future, but we still need to choose the target with clear growth logic to obtain excess returns.
Continue to focus on the "east east" combination and consume the bottom area of building materials. 1) Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) is the first choice of our real estate chain. Yuhong takes the lead in the industry, completes the organizational structure adjustment in 18q4, and sinks the channel in 2020. At present, the proportion of channels such as public construction integration company, real estate centralized procurement, other engineering business departments, civil construction and partners is the best, which can effectively control risks and provide growth beyond the industry. At the same time, the overall consumer building materials sector has entered the allocation area, and the valuation has been fully adjusted. Next, the catalyst is the decline of upstream bulk prices. It is recommended that Guangdong Kinlong Hardware Products Co.Ltd(002791) , Skshu Paint Co.Ltd(603737) , Keshun Waterproof Technologies Co.Ltd(300737) , Zhejiang Weixing New Building Materials Co.Ltd(002372) , Monalisa Group Co.Ltd(002918) , etc; 2) Qingdao East Steel Tower Stock Co.Ltd(002545) is the first choice for our "construction +" chain. Potash fertilizer judges that due to the further fragmentation of the global supply chain and the outbreak of demand in the inflationary environment, the prosperity continues to rise, and the company will enter the upward channel of double increase in volume and price in 202225; 3) Shandong Hi-Speed Road&Bridge Co.Ltd(000498) is the first choice for the stable growth chain of infrastructure construction. The repeated epidemic in many places across the country and the increasing economic pressure once again highlight that stable growth will be one of the main lines of the whole year. The company has abundant orders in hand and Shandong Province is in the forefront of infrastructure planning such as roads and railways in the country.
Risk tips
The demand is lower than expected, the cost is higher than expected, and there are systemic risks.
