In April, with the advent of the peak traditional construction season, early policy funding was gradually put in place. Midstream channel inventory replenishment led to a month-on-month improvement in physical volume, and prices for photovoltaic glass, glass fiber, float glass, and cement began to rise one after another.
The Zhitong Finance App learned that Huatai Securities released a research report stating that according to the National Bureau of Statistics, infrastructure (excluding electricity) /real estate/manufacturing investment was +6.5%/-9.5%/+9.9% year-on-year, compared with the January-February growth rate of +0.2/-0.5/+0.5pct, and investment in infrastructure and manufacturing continued to accelerate. In April, with the advent of the peak traditional construction season, early policy funding was gradually put in place. Midstream channel inventory replenishment led to a month-on-month improvement in physical volume, and prices of photovoltaic glass, glass fiber, float glass, and cement began to rise one after another. However, since there is still a relative excess on the supply side, terminal demand will determine the sustainability of price increases. The short-term construction materials industry continues to recommend undervalued sectors such as central state-owned enterprises and C-end building materials.
Key recommendations: Tunnel Co., Ltd. (600820.SH), China Railway (00390), CCCC Design (600720.SH), Beijin Construction Materials (000786.SZ), Weixing New Materials (002372.SZ), China Jushi (600176.SH), Kibing Group (). 601636.SH
The main views of Huatai Securities are as follows:
The cumulative decline in real estate sales and new construction has narrowed, and C-side retail sales of building materials performed well year over year
Real estate sales/new starting/completed area in January-March '24 was -19.4%/-27.8%/-20.7%. Compared with the January-February growth rate of +1.1/+1.9/-0.5pct, the cumulative decline in sales and new construction narrowed. According to Aowei Cloud Network, 45,000 refinement projects were opened in January-February '24, -20.5%; according to the National Bureau of Statistics, retail sales of construction and decoration materials companies above the January-March quota were 38.7 billion yuan, +2.4% over the same period. The C-side retail performance was better than that of the engineering side. According to Wind, as of April 12, the average price of asphalt/titanium dioxide, domestic waste, ethylene oxide/PVC was +0.02%/-0.8%/+0.4%/+0.1% month-on-month, respectively, and -3.2%/-7.8%/-1.4%/-7.8% year-on-year, respectively. The overall cost remained stable in early '24.
Supply is still under pressure due to high production capacity of float glass. In April, PV glass continued to rise in price and hit the ground
According to the National Bureau of Statistics, the production of flat glass in January-March '24 was 250 million heavy boxes, +7.8% year-on-year. There is still pressure on the supply side under high production capacity. On the price side, according to Zhuochuang information, from the beginning of the year to April 11, the average price of 5mm white glass nationwide was 103 yuan/heavy box, +15.3%; on April 11, the average price was 92 yuan/heavy box, -0.2% year-on-year, and the overall trend has been declining since March. Photovoltaic glass inventories have continued to decline since March. According to Zhuochuang information, as of April 11, solar glass sample companies had an inventory of 17.3 days, -17.3% year-on-year; the average price of 3.2/2.0mm coated photovoltaic glass was 26/18 yuan/square meter, +2.3%/+12.2% month-on-month, and the price increase for photovoltaic glass came to fruition in April. According to Wind, the national average price of heavy alkali fell 2.0% month-on-month from the beginning of the year to April 11, and the downward trend on the cost side of glass companies is expected to continue.
Cumulative cement production declined in January-March, and increased seasonal demand led to a rise in cement prices in April
According to the National Bureau of Statistics, cement production in January-March '24 was 340 million tons, -11.8% year-on-year. The slow pace of resumption of work led to a relatively low rate of cement operation. According to Digital Cement Network, the average price of cement from the beginning of the year to April 12 was 368 yuan/ton, -15.3%. On April 12, the average price of cement and clinker nationwide was 363/261 yuan/ton, respectively, +0.3%/+3.2% from week to month. Prices showed an upward trend as demand recovered month-on-month. The average cement shipment rate from the beginning of the year to April 12 was 33.9%, -8.8 pct year on year; on April 12, cement shipment rate was 50.9%, +5.1 pct week on month; on April 12, storage volume ratio was 69.9%, +0.9 pct year on year. Huatai Securities said that with the advent of the peak traditional construction season and the gradual disbursement of early policy funds, the increase in project operating rate is expected to drive up cement shipments and prices, but the sustainability of price increases still depends on the evolution of terminal demand.
Risk warning: Real estate investment has declined sharply, raw material prices have risen more than expected, and the new production capacity of the industry has increased dramatically.