Matters:
1) on January 17, the National Bureau of statistics released the macro data of December 2021. In 2021, the annual real estate investment and infrastructure investment increased by 4.4% and 0.21% respectively year-on-year, with the growth rate decreasing by 1.6pct and increasing by 0.38pct compared with that from January to November.
2) on January 18, Liu Guoqiang, vice president of the people’s Bank of China, said at the press conference of the state information office that at present, the economy is facing triple pressure, “stability” itself is the biggest “progress”, so as to promote stability with progress. The national development and Reform Commission said that there were many uncertain factors in the first quarter, and the policy force point should be moved forward appropriately.
Ping An View:
The expectation of steady growth is strengthened, and the follow-up infrastructure is expected to work. At present, China’s economy is facing triple pressures of shrinking demand, supply shock and weakening expectation. In December 2021, real estate investment decreased by 13.9% year-on-year, and commercial housing sales decreased by 17.8% year-on-year. Under the demand of steady growth, the central bank stated that “promoting stability with progress” and “introducing more policies conducive to” stability “and” meeting the reasonable financing needs of the real estate market “. The national development and Reform Commission also said that” strive to form more physical workload in the first quarter “. It is expected that the follow-up infrastructure investment will be gradually improved, and more real estate support policies are expected to be introduced to drive the financing, sales and Land purchase returns to normal.
Cement: benefit from the recovery of infrastructure investment and the improvement of demand side or margin. In 2021, the performance of the cement sector was sluggish. On the one hand, due to the sluggish downstream demand, especially since September, some real estate enterprises have defaulted and increased the pressure on real estate investment; On the other hand, the cost side is under pressure due to the sharp rise in coal prices. In the short term, considering that the fundamentals of downstream real estate have been at the bottom stage with the continuous improvement of policies, and the infrastructure investment is expected to exert its force (a year-on-year increase of 3.7% and a month on month increase of 11.0pcts in December 2021), which supports the cement demand. The cement output in December decreased by 11.1% year on year and narrowed by 7.5pct month on month; Meanwhile, coal prices have dropped significantly recently, and the profitability of subsequent cement enterprises is expected to improve slightly.
Waterproof: the impairment pressure is gradually released, and the price is raised to hedge the cost pressure. Due to the sharp rise in asphalt prices, superimposed with the default of some real estate enterprises, increasing the pressure on real estate investment and the impairment of accounts receivable, the performance of waterproof enterprises in 2021 is generally under pressure. Recently, Keshun and Yuhong have successively announced the performance express of 2021, and the performance impact caused by short-term impairment has been gradually released. In the future, it is less likely that the default risk of real estate enterprises will spread significantly after the policy warms up. The recovery of infrastructure investment and the development of roof photovoltaic will support the waterproof demand; In addition, at the beginning of the year, high-quality waterproof enterprises are expected to raise prices to alleviate the cost pressure and gradually improve the profit margin. In the medium and long term, it is the general trend of the industry to raise standards. The real estate credit impact is also expected to accelerate the liquidation of small and medium-sized waterproof enterprises with weak risk resistance. In the future, leading enterprises are expected to usher in both concentration and demand.
Flat glass: the completion logic has not been completed, and the demand is still supported. Benefiting from the high completion rate of downstream real estate, the volume and price of flat glass increased in the first three quarters of 2021. With the default of some real estate enterprises, the completion slowed down significantly, and the volume and price performance of flat glass weakened under the decline of demand. In the future, with the gradual relief of the pressure on the capital side of real estate enterprises, the completion and repair speed of real estate under the policy of “guaranteed delivery” may be faster than the commencement, resulting in the gradual recovery of the demand side; At the same time, considering that the flat glass industry has entered the peak of cold repair and the supply may shrink, it will support the price of flat glass.
Investment suggestion: under the demand of steady growth, the central bank stated that “promote stability with progress”, and the national development and Reform Commission also said that “strive to form more physical workload in the first quarter”. It is expected that the follow-up infrastructure investment is expected to be gradually improved. At the same time, more real estate support policies are expected to be introduced to drive the financing, sales and land purchase of real estate enterprises back to normal. In terms of investment, we are relatively optimistic about the cement and waterproof sector in the short term. In terms of cement, the real estate policy continues to improve, the infrastructure is expected to develop, and the profit side is expected to improve with the decline of coal price. It is suggested to pay attention to the cement leaders with stable performance and undervalued value, such as Anhui Conch Cement Company Limited(600585) ; In terms of waterproofing, the recovery of infrastructure construction is expected to boost the demand for waterproofing, and the subsequent profit margin is expected to gradually improve. In the medium and long term, the general trend of industry standard raising is expected to lead to a double increase in concentration and demand. The frequent defaults of downstream real estate enterprises also accelerate the clearing of the waterproof industry pattern. It is suggested to pay attention to the industry leaders with brand strength, product advantages and price raising ability, Such as Keshun Waterproof Technologies Co.Ltd(300737) . In terms of glass, if the real estate capital side is significantly improved and the glass demand is still supported under the continuation of the completion peak logic, it is recommended to pay attention to industry leaders, such as Zhuzhou Kibing Group Co.Ltd(601636) .
Risk tips: 1) the investment in infrastructure and real estate is lower than expected; 2) the prices of raw materials and fuel continue to rise; 3) the risk of untimely recovery of accounts receivable and bad debt provision.
