Zhitong Finance Editor, Guoxin Securities released a research report saying that the Politburo meeting set the policy direction of “eliminating stocks and optimizing incremental growth”. Mainstream cities have successively optimized purchase restriction policies, which is expected to reverse pessimistic real estate expectations to a certain extent. Currently, fundamentals have not improved significantly, and market confidence will take time to recover. Follow-up support policies are still expected to be further strengthened, and valuations and positions in the building materials sector are at a low level. Focus on the recovery of high-quality consumer building materials leaders and opportunities for recovering individual stocks that have exceeded expectations.
Recommended Dongfang Yuhong (002271.SZ), Beixin Building Materials (000786.SZ), Jianlang Hardware (002791.SZ), Three Trees (603737.SH), Weixing New Materials (002372.SZ), Rabbit Baby (002043.SZ), and Keshun Co., Ltd. (300737.SZ); at the same time, Cyclic Building Materials focuses on leading brands that are expected to improve bottom profit expectations. We recommend China Jushi (600176.SH), Sinoma Technology (002080.SZ), Conch Cement (600585.SH) new Cement (600801.SH), Kibing Group (601636.SH); other segments focus on Ocean King (002724.SZ), a leading professional lighting company.
The main views of Guoxin Securities are as follows:
Overview of the position situation: 2024Q1 building materials holdings continue to be low, and the holding ratio is at a historically low level and is still declining
The market capitalization of the 2024Q1 fund heavy building materials industry was 11.906 billion yuan, down 6.53% from 2023Q4, accounting for 0.75% of the fund's heavy A-share market value, down 0.01pp from 0.76% in 2023Q4. Compared with the 2024Q1 building materials industry standard allocation ratio of 1.17% (free circulation market value of the building materials industry/market value of Wandequan A free circulation market value), the overallocation ratio was -0.42pp, continuing to be low.
Position analysis: The concentration of positions decreased slightly, but the overall configuration was still relatively concentrated. Looking at individual holdings, the total market value of the top 10 heavy building materials stocks of the 2024Q1 fund was 10.568 billion yuan, down 8.1% from 2023Q4, accounting for 88.77% of the market value of the fund's heavy building materials industry during the same period, down 1.53 pp from month to month. The overall allocation concentration of institutions to the building materials industry is still high.
Overall, pessimistic expectations in the real estate chain continue, dividend allocation logic continues to be popular, profit improvements at the bottom of the benefit cycle for some varieties have increased, and attention to the new material carbon fiber continues to increase. Judging from the changes in the increase and decrease in holdings in the main sub-sectors, the cement sector's attention has increased. The main benefit is expected to improve bottom profit expectations and higher dividend rate support, and the leading label with dividends and growth is relatively more popular; the glass sector is still differentiated, benefiting from the price increase of photovoltaic glass and overall profit improvements, leading companies have received a certain increase in holdings, while electronic glass has decreased; there is a slight marginal improvement in supply and demand at the bottom of the glass fiber cycle, and the overall increase in profit expectations of the sector is obvious.
In addition, pessimistic expectations in the real estate chain continued, and the holding ratio of the main targets declined further. Some C-side varieties benefited from operating resilience and better cash flow support. At the same time, the quarterly performance performance exceeded expectations, while dividends remained high and showed an upward trend. The carbon fiber sector related to new materials was further increased, or affected by potential market application opportunities brought about by the acceleration of mass production of large domestic aircraft and low-altitude economy and humanoid robots.
Land Stock Connect: Northbound capital holdings continue to decline
Judging from the month-on-month change in shares held by Land Stock Connect in shares in circulation, the top 5 targets for increasing holdings in 2024Q1 were Zhite New Materials, Zhenan Technology, Mona Lisa, Beixin Construction Materials, and Conch Cement; the top 5 targets for reducing holdings were Gongyuan Shares, Sankeshu, Jianlang Hardware, Dongpeng Holdings, and Zaisheng Technology. Judging from the month-on-month changes in the market value of Lu Stock Connect's shares, the top 5 stocks that increased their market value in 2024Q1 were Beixin Construction Materials, Conch Cement, Follett, Guangwei Composites, and Tianshan Co., Ltd.; the top 5 targets for the decrease in market value were Dongfang Yuhong, Sankeshu, Sinoma Technology, China Jushi, and Gongyuan shares.
Overall, Northbound capital holdings also continue to show a downward trend, and consumer building materials targets related to the real estate chain are still the main direction of reducing holdings. By sector, cement-related targets have benefited from undervaluation and dividend rate support. The glass fiber sector continues to reduce holdings. Photovoltaic glass in the glass sector has received a certain increase in holdings, and float glass is still under pressure; the overall trend of reducing holdings by other leading companies in the real estate chain is still obvious. The overall trend of reducing holdings by leading companies in the real estate chain has increased markedly, and is mainly influenced by performance exceeding expectations and the certainty of consolidated growth.
Risk warning: Policy implementation falls short of expectations; supply increases exceed expectations; cost increases exceed expectations.