Intelligence Finance APP learned that, according to research reports published by Swhy, the basic fundamentals of the building materials industry will be under pressure in 2022-2023.C in the first half of 2023, there will be a strong improvement, but it will decline again later. It is expected that the main enterprises will still be under pressure in the first half of 2024. The main reasons are: relative tightening of local government finances; some provinces and cities have suspended or slowed down infrastructure projects; expectations for residents' income are unclear, and the demand for building materials for housing purchase or renovation will be postponed accordingly; Real estate companies are short of funds, and the pace of construction has slowed down, with weak willingness to take land and start new projects; the base number was relatively high in the same period last year. However, with the gradual introduction of policies such as real estate collection and reduction of down payment ratios, the overall building materials industry is expected to continue to show a weak recovery trend in the future.

Shenwan Hongyuan's main points are as follows:

Consumer building materials: Q2 main decoration and building materials market is relatively sluggish.

According to statistics from the National Bureau of Statistics, in the second quarter, the social retail and construction and decoration materials sub-item declined by about 4.5% year-on-year, and the cumulative completion of real estate from January to June decreased by 21.8%. The overall performance of consumption building materials in the post-real estate cycle is sluggish, with both the project side and the retail side under pressure. With the decline in the completion of new houses, the stock housing formed in the rapid urbanization process in China will gradually begin to be renovated, contributing to the increase in demand for consumer building materials. The quality of early-built stock houses is relatively weak compared to the current ones, and the aging of houses due to their increasing age will deteriorate the living experience, thus accelerating the need for house renovation and transformation. In addition to the age of the house, residents' disposable income and future income expectations are important influencing variables for renovation and transformation. The per capita disposable income of residents in the first half of the year increased by 5.3% cumulatively, which may provide support for future renovation demand.

Cement: It is expected that multiple enterprises will still report losses, but will not currently be unprofitable.

In the first half of the year, the cement industry's price performance was relatively flat, and the price increase was weak despite the peak season. According to Zhuochuang Information, the average price of 42.5 cement powder in the first and second quarters was 322.4 and 322.9 yuan/ton respectively. In the second quarter, the cement price was basically flat month-on-month, a year-on-year decrease of 46.7 yuan/ton. We estimate that the price difference between water and coal in the second quarter was 178.9 yuan/ton, a year-on-year decrease of 30.7 yuan/ton. The cement industry is still under pressure in the second quarter, but there are marginal signs of improvement. Northeast and North China took the lead in increasing the staggered production days. By limiting production and maintaining prices, they stabilized profits. Many provinces in East China also increased their staggered production days in July-August to maintain prices. The feature of cement production lines being able to start and stop immediately is a prerequisite for limiting production and maintaining price. Cement enterprises choose to cooperate to limit production and maintain price when facing large-scale losses, thus achieving a new balance between supply and demand. This may be the core feature of the cement industry for the next few quarters, and the profitability of the cement industry may have bottomed out.

Glass fiber: after the price increase in the second quarter, it stabilized, and the profitability improved month-on-month.

At the end of March, the price of glass fiber industry began to make a bottom recovery. Since mid-May, the price of glass fibers has remained relatively stable for nearly 2 months. The price increase has driven the profitability recovery of the glass fiber industry, but there is a time lag for the price increase. Some long-term procurement contracts have not yet implemented the price increase, and the profitability recovery will still be partially reflected in the third and fourth quarters. It was found that many building/cold repair production lines were postponed in the first half of the year, which reflected the tacit understanding of the industry to stabilize supply and protect profits. The reduction in new production capacity has reduced the support for a stable price and further increase in the future of the fiberglass industry.

Glass: the completion of the project is under pressure, and the price is relatively falling.

Glass has a relatively high correlation with the completion of real estate, and the downturn of completion has pulled down the price of glass. According to Zhuochuang Information, in the second quarter, the average price of glass was 88.0 yuan/weight box, a decrease of 15.96 yuan/weight box year-on-year. The average inventory days were 17.41 days, an increase of 1.11 days year-on-year. The glass industry's profitability in the second quarter is expected to come under pressure.

Investment analysis opinions

Consumer building materials: it is expected that after the introduction of policies such as collection in the second quarter, the industry's pressure will weaken, and alpha advantages will begin to become the main driving force. Long-term configuration value will increase. It is recommended to pay attention to Beixin Building Materials(000786.SZ), Weixing New Materials(002372.SZ), Tubobao(002043.SZ), Skshu Paint(603737.SH), and other stocks.

Cement: the industry's profit-seeking demand has increased, and the new situation of staggered production may build a new balance for the industry. It is recommended to pay attention to Conch Cement(600585.SH), Huaxin Cement(600801.SH), and Tianshan Cement(000877.SZ), and other stocks.

Glass fiber: the profit-seeking ability has improved after the price increase. It is recommended to pay attention to China Jushi Co., Ltd.(600176.SH), Sinoma Science & Technology(002080.SZ), and other stocks.

Glass: the price has fallen, and the profitability is under pressure. The follow-up is to pay attention to the repair of production lines and completion. It is recommended to pay attention to Zhuzhou Kibing Group(601636.SH) and other stocks.

Risk warning: Macroeconomic recovery is lower than expected, infrastructure investment is lower than expected, and real estate investment is lower than expected, etc.