Talk every Monday: how to understand the recent differentiation between real estate and real estate chain?
We found that the real estate market usually starts from the policy reversal and flourishes in the year-on-year improvement of fundamental data (real estate sales). When the growth rate of real estate sales peaked or was about to peak, the market came to an end. At present, the real estate is still in its early stage, with frequent care policies, and there is no downside risk before the fundamentals are reversed.
Historically, the rise and fall rhythm of the real estate sector was highly synchronized with the real estate chain, and home decoration and building materials were not absent in the three rounds of real estate rise. The end of the market in the real estate sector is usually ahead of the peak of sales growth, while the end of the market in the real estate chain usually lags behind the real estate sector. From 2019 to 2021, the absence of policies and hot fundamentals gave birth to the first differentiation period. The continuous recovery of real estate sales and completion made the building materials industry in the real estate chain out of the big market, but the real estate sector was not flexible due to the constraints of policy expectations.
Since the emergence of the policy at the end of July 21, the performance of the real estate chain sector has been significantly weaker than that of real estate. After the end of the policy, the real estate chain fell endlessly due to some problems, and the risk of real estate enterprises hit the bottom again in November 21, while the real estate rebounded in the same period. Since then, we have ushered in the second round of RRR reduction and walked out of the valuation repair market together with the real estate sector. In February, 22, as the bad debt provision of some enterprises exceeded the market expectation again, the home decoration building materials sector continued to decline. Since March 22, many places have liberalized purchase restrictions, and the real estate chain has lost the real estate sector again. The real estate chain is weaker than the real estate sector. We believe that it is related to the two unique risks of the consumer building materials sector. The market still has doubts about whether the two risk factors are marginally improved. First, the credit impairment risk brought by problematic real estate enterprises. Second, the price risk of raw materials. We believe that the two doubts will eventually be dispelled and we will see more clearly after entering Q2. Home decoration building materials is a large industry with scattered pattern. A number of high growth enterprises with excellent quality have gathered in the industry, and the path of increasing the share of leading cities has not changed. We are highly optimistic about the make-up space after the elimination of risk factors related to the real estate chain.
Tracking of key sub industries:
Glass: profitability bottomed out and the demand side gradually entered the peak season. By April 15, the average price of the latest glass in China was 205267 yuan / ton, up 0.53% from the previous week, and the downward trend lasting for two months reversed for the first time. The recovery of demand is relatively slow compared with previous years, there is no significant improvement in the new orders of downstream processing plants, and the commencement of processing plants and logistics in some regions are blocked. The total inventory of production enterprises in key monitoring provinces was 59.58 million weight boxes, an increase of 2.45 million weight boxes or 4.29% 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) , the integrated leading Lutheran glass with continuously increasing market share, which has entered a new growth period.
Cement: the marginal opportunity of improving the allocation of fundamentals is emotional. As of April 15, 2022, the national average price of cement was 469.67 yuan / ton, down 0.07% month on month. The cement price has no upward elasticity, and the demand is still weak. Clinker inventory continued to grow this week, with the average national clinker storage capacity ratio of 64.01%, up 1.36 PCTs compared with last week. The operating load of the mill was 50.63%, an increase of 5.01 PCTs over last week. The average price difference between cement and coal in this period was 334.34 yuan / ton, up 14.36% from last Thursday. Compared with the same period last year, the average price difference between cement and coal fell by 0.74%.
Consumer building materials: it belongs to the second stage of the real estate market. The downward superposition of crude oil prices and the lifting of the real estate purchase restriction policy 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 15, the building materials sector fell 5.11% and the CSI 300 index fell 0.99%. From the perspective of sector ranking, the building materials sector ranked 25th among Shenwan 31 sectors last week, with an increase of - 12.63% year to date, ranking 13th among Shenwan 31 sectors.
Top five gainers of individual stocks: Shandong Yabo Technology Co.Ltd(002323) , Guangdong Sanhe Pile Co.Ltd(003037) , Lets Holdings Group Co.Ltd(002398) , Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) , Ningxia Qinglong Pipes Industry Group Co.Ltd(002457) .
The top five stocks with declines: Jinyuan Ep Co.Ltd(000546) , Shandong Jinjing Science And Technology Stock Co.Ltd(600586) , Sichuan Golden Summit (Group) Joint-Stock Co.Ltd(600678) , Yunnan Bowin Technology Industry Co.Ltd(600883) , Shenzhen Universe (Group) Co.Ltd(000023) .
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.
