Investment summary:
Talk every Monday: one of the core targets of steady growth: Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496)
The company is a provider of products and construction solutions in the steel structure industry, and has become a professional household of key projects under the guidance of technology. From the bird’s nest of the summer Olympic stadium to Daxing airport to Hong Kong airport, the company has almost never been absent from the construction of national key projects. The revenue growth is relatively stable, and the profit side growth rate fluctuates slightly due to the cost of raw materials. The gross profit margin is negatively correlated with the steel price. When the steel price rises rapidly, the gross profit margin of the company will be impacted to a certain extent. The business structure is mainly steel structure engineering, and public buildings and industrial buildings go hand in hand. The two businesses accounted for 38% and 43% respectively. At the same time, the transformation extends to the field of EPC engineering, from the contractor to the general contractor, the voice of the industrial chain is significantly improved, and the comprehensive profitability is continuously strengthened.
Orders on hand grew rapidly to ensure short-term growth. In 2021, the cumulative contract amount was 16.949 billion yuan, a year-on-year increase of 13.29%. The company made a good start in 2022q1, with newly signed sales of 4.46 billion yuan, a year-on-year increase of 34%, and achieved a strong start against the trend.
In the middle of the boom, the implementation of lock-in growth will accelerate the expansion of production demand. In 2021, the sales volume exceeded 1 million tons for the first time, with a year-on-year increase of 34%. At present, the company has a total production capacity of 670000 tons, raised convertible bonds to build Anhui Lu’an base and expand production by 200000 tons. At the same time, 400000 square meters of prefabricated building supporting production capacity is added in Zhejiang Shaoxing base, and the growth is supported by sufficient production capacity.
Key investment points: first, under the background of steady growth, the newly signed contract amount will accelerate growth; 2、 Steel prices fall and increase profitability; 3、 Beta market of steel structure sector catalyzed by policy.
Tracking of key sub industries:
Glass: bottom profitability, focus on the layout of photovoltaic glass. As of May 20, the average price of the latest glass in China was 196337 yuan / ton, down 2.42% from the average price last week. The recovery of demand was relatively slow compared with previous years. There was no significant improvement in the new orders of downstream processing plants, lack of strong demand side support, and the operating rate was lower than expected. The overall inventory rose slightly. The total inventory of production enterprises in key monitoring provinces was 64.52 million weight boxes, an increase of 1.21 million weight boxes over last week, an increase of 1.91%. 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 fell under pressure. 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 continue to focus on recommending Zhuzhou Kibing Group Co.Ltd(601636) .
Cement: the marginal opportunity of improving the allocation of fundamentals is emotional. As of May 20, 2022, the national average price of cement was 445.75 yuan / ton, down 1.8% from last week. The cement demand is expected to remain weak next week, the pressure of supply and demand may be difficult to ease, and the downward trend of price is still obvious. The clinker inventory continued to grow this week, with the national average clinker storage capacity ratio of 70.01%, an increase of 2.85 PCTs compared with last week. The mill operating load was 54.12%, down 0.68 PCTs from last week. The average price difference between cement and coal in this period was 273.14 yuan / ton, down 5.44% from last Thursday. Compared with the same period last year, the average price difference between cement and coal fell 17.81%.
Consumer building materials: the five-year LPR has been heavily reduced, and consumer building materials is expected to usher in the double repair of performance and valuation. The differentiation in the industry continues in the trough period, but we believe that the logic of expanding categories and increasing concentration 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) , Skshu Paint Co.Ltd(603737) .
Market review: as of the closing on May 20, the building materials sector rose 2.78% and the CSI 300 index rose 2.23%. From the perspective of sector ranking, the building materials sector ranked 13th among Shenwan 31 sectors last week, with an increase of – 14.00% year to date, and ranked 12th among Shenwan 31 sectors.
Top five gainers of individual stocks: Zyf Lopsking Aluminum Co.Ltd(002333) , Gansu Qilianshan Cement Group Co.Ltd(600720) , Sinostone(Guangdong) Co.Ltd(001212) , Hainan Development Holdings Nanhai Co.Ltd(002163) , Zhuzhou Kibing Group Co.Ltd(601636) .
Top five stocks with declines: Jiangsu Jingxue Insulation Technology Co.Ltd(301010) , Hainan Ruize New Building Material Co.Ltd(002596) , Luoyang Northglass Technology Co.Ltd(002613) , Guangdong Sanhe Pile Co.Ltd(003037) , Ningxia Qinglong Pipes Industry Group Co.Ltd(002457) . 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) ; The recovery of real estate first promotes Zhejiang Weixing New Building Materials Co.Ltd(002372) , Skshu Paint Co.Ltd(603737) , and Dehua Tb New Decoration Material Co.Ltd(002043) , which is dominated by the consumption attribute in building materials, and Skshu Paint Co.Ltd(603737) , which is reversed by adversity; 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.
