Currently, policies on both the supply and demand sides of the real estate industry have been intensively introduced, which may have a positive impact on improving the fundamentals of building materials in the real estate chain. Currently, it may still be a phased low point in the fundamentals of traditional building materials, so it is recommended that active attention be paid.
The Zhitong Finance App learned that Tianfeng Securities released a research report saying that according to statistics, listed companies in the building materials industry achieved total revenue of 695.9 billion yuan in 2023, a year-on-year decrease of 0.8%, and the decline narrowed somewhat. Net profit due to mother in 2023 was 41.3 billion yuan, down 27.4% year on year, and profit margins were further squeezed. Affected by the continued decline in real estate demand, the 2024Q1 building materials industry was still under heavy pressure. Revenue/net profit to mother was 1260/3.1 billion yuan, respectively, -12.5%/-47.4% year-on-year. Currently, policies on both the supply and demand sides of the real estate industry have been intensively introduced, which may have a positive impact on improving the fundamentals of building materials in the real estate chain. Currently, it may still be a phased low point in the fundamentals of traditional building materials, so it is recommended that active attention be paid. Downstream demand for new materials is growing better. With the optimization of the supply and demand pattern, the performance of new energy and pharmaceutical upstream materials companies has achieved high growth, and the industrial chain is booming.
Tianfeng Securities's main views are as follows:
Traditional building materials: glass, consumer building materials performance growth, 24Q1 cement and glass fiber may have completed the bottom
1) Consumer building materials: 23-year revenue/net profit +2.7%/+4.5%, 24Q1 revenue/net profit -0.1%/-1.2%, gross margin/net profit ratio 27.1%/5.9%; gypsum board/paint/waterproof revenue growth ranked in the top three in 23. Pipe revenue declined year-on-year, mainly dragged down by the B-side decline, reflecting that demand on the completion side was better than on the B-side, and pipe/gypsum board profit increased year-on-year in 23.
Tianfeng Securities believes that downstream customer payment conditions are expected to gradually improve, which is beneficial to consumer building materials companies with high current accounts receivable pressure and early impairment charges. In the medium to long term, the driving effect of transformation on the industry will gradually be reflected. The competitive advantage brought by the channel layout of leading companies has gradually been reflected in performance. At the same time, the medium- to long-term growth brought about by some companies through category expansion is also worth paying attention to. We recommend Dongfang Yuhong (002271.SZ), Sanshu (603737.SH), Beixin Construction (000786.SZ), and ASC (6033) 78 .SH), Mona Lisa (002918.SZ), etc.
2) Cement: Revenue/net profit to mother in '23 was -5.7%/-41.4%, 24Q1 revenue was -26.0%. Profits were already lost, gross margin/net interest rate 13.4%/-2.5%, and the industry experienced extensive losses under the 24Q1 price level. Tianfeng Securities expects limited room for price downward. It is expected to improve month-on-month in Q2, and cement price elasticity is still high in '24. Currently, the dividend rates of some A-share cement companies and Hong Kong cement companies remain at a high level, and the cement sector has the advantage of being able to attack and defend. We recommend Huaxin Cement (600801.SH), Conch Cement (600585.SH), and Qingsong Jianhua (600425.SH), which has an excellent regional layout. It is recommended to focus on Western Cement (02233), which has an excellent offshore layout.
3) Glass fiber: 23-year revenue/net profit to mother -4.2%/-51.5%, 24Q1 revenue/net profit year-on-year ratio -2.8%/-63.5%, gross margin/net profit ratio 18.7%/5.8%. The price of 24Q1 glass fiber has fallen to a relatively low point in history. Tianfeng Securities believes that the current profit environment will help guide the industry to expand new production capacity in an orderly manner. At the same time, the industry's cold repair is also expected to accelerate, further reducing supply pressure. As application fields expand in the medium to long term, demand will still grow well. We recommend China Jushi (600176.SH) and Changhai Co., Ltd. (300196.SZ).
4) Glass: 23-year PV glass revenue/net profit to mother +34.2%, 24Q1 revenue/net profit to mother +5.9%/+9.5%, gross margin/net margin 17.4%/9.5%; float revenue/net profit to mother +14.9%/+7.5% YoY; 24Q1 revenue/net profit to mother +7.3% YoY, 24Q1 revenue/net profit YoY +7.3%, gross margin/net margin of 21.9%/8.3%. Currently, the market value of glass leading glass is at a historically low level. Short-term float glass profits are still resilient. Photovoltaic glass is expected to benefit from the recovery in the industrial chain. We recommend Kibing Group (601636.SH), Xinyi Glass (00868), Follett (601865.SH), etc.
New materials: Upstream demand in the new energy and medicinal fields is booming, and emphasis is placed on new materials with long-term growth
The downstream demand structure is relatively diverse. The industrialization of some varieties is relatively mature, and the profits of leading companies in photovoltaic glass, medicinal glass, and quartz materials increased further month-on-month in 23. Tianfeng Securities believes that photovoltaic glass is expected to benefit from the recovery in the industrial chain, while pharmaceutical glass is expected to continue to benefit from the increase in borosilicate penetration rate. Current valuation advantages may gradually emerge. We recommend Shandong Pharmaceutical (600529.SH); Downstream demand for consumer electronics is expected to gradually pick up, and medium- to long-term electronic glass is expected to benefit from a gradual recovery, and is expected to replace domestic production and release new products such as folding screens. Sheng Technology ( 600552.SH); With the promotion of “double carbon”, demand for high-quality fire-resistant insulation materials is growing or accelerating. It is recommended to focus on Luyang Energy Saving (002088.SZ) and Beijing Lier (002392.SZ).
Risk warning: Downstream demand fell beyond expectations, raw material price increases exceeded expectations, and production capacity investment exceeded expectations.