A brief review of the historical market of the pipeline: category, channel and demand determine the excess return. According to different material properties, pipes mainly include concrete pipes, metal pipes and plastic pipes. The performance of the three categories of pipes is different, and the application scenarios are also different. We reviewed the five rounds of market in the history of the pipeline industry. When large-scale water conservancy projects are expected to rise, concrete pipeline enterprises can often obtain good excess returns; When municipal projects are the main focus, plastic pipeline enterprises often have better performance. However, due to the relative homogenization of the real estate municipal engineering pipe industry, low concentration and slow improvement in the past, in the old reform market in 2020, most plastic pipeline enterprises still have not obtained excess returns, and the industry is mainly concentrated α Reflected in the consumption upgrading of home decoration pipe.
In 2022, pipeline is one of the building materials benefiting from steady growth. In the previous series of reports, we summarized four potential drivers of steady growth in 2022: affordable housing, urban renovation, new infrastructure and some traditional infrastructure, and we believe that pipeline is still an important driver of steady growth: 1) after China's reform and opening up, the first batch of pipeline networks built gradually reach the replacement cycle, and there is also a replacement demand for some pipe networks with unreasonable design, Pipe network renewal is expected to accelerate in 2022. 2) major projects such as the great protection of the Yangtze River are urgent, and 3) intelligent heating in affordable housing and new infrastructure will also further increase the demand for pipes.
The demand for old pipe network reconstruction + Yangtze River protection or upgrading of plastic pipes is 6.0%. Due to the high capital certainty at the to G end, we believe that the most determined incremental demand for pipelines in 2022 comes from the reconstruction of old pipe networks and municipal projects represented by the great protection of the Yangtze River. We estimate that the above two projects will boost the demand for plastic pipes by about 970000 tons in 2022, equivalent to 6.0% of the current output, and the demand for concrete pipes and metal pipes will also be well boosted.
Investment advice. We believe that the following enterprises will benefit from the increase in pipeline demand:
1) direction of home decoration pipes: recommended Zhejiang Weixing New Building Materials Co.Ltd(002372) , benefiting from consumption upgrading and channel expansion. Yonggao Co.Ltd(002641) . H shares benefit China Liansu industry.
2) direction of pipes for real estate engineering and general small municipal engineering: engineering plastic pipe enterprises Yonggao Co.Ltd(002641) , Guangdong Xiongsu Technology Group Co.Ltd(300599) , Fujian Superpipe Co.Ltd(300198) , Shandong Donghong Pipe Industry Co.Ltd(603856) , and H-share China Liansu industry benefit.
3) large scale water conservancy projects: a) concrete pipe enterprises Ningxia Qinglong Pipes Industry Group Co.Ltd(002457) , Shandong Donghong Pipe Industry Co.Ltd(603856) , Beijing Hanjian Heshan Pipeline Co.Ltd(603616) , Xinjiang Guotong Pipeline Co.Ltd(002205) , Shandong Longquan Pipeline Engineering Co.Ltd(002671) and b) metal pipe enterprises Xinxing Ductile Iron Pipes Co.Ltd(000778) , Tianjin You Fa Steel Pipe Group Stock Co.Ltd(601686) , Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) benefit from the industry and have high beta attributes.
4) real estate commencement: the concrete pipe pile enterprise Guangdong Sanhe Pile Co.Ltd(003037) industry benefits.
5) coal engineering: Shandong Donghong Pipe Industry Co.Ltd(603856) industry benefits.
6) pipeline network exploration and Design Enterprises: Zhengyuan Geomatics Group Co.Ltd(688509) , Beijing Egova Co.Ltd(300075) industries benefit.
Risk warning. The promotion of relevant policies is less than expected, the market competition is more intense than expected, and there are systemic risks.
