In the past five trading days (0826-0830), the CSI 300 index fell by 0.17%, and the building materials (CITIC) rose by 1.24%. Except for cement and fiberglass, which achieved negative returns, all other sectors achieved positive returns.
According to Wind, from 0824 to 0830, the sales area of commodity housing in 30 large and medium-sized cities reached 1.6286 million square meters, an increase of 1.29% month-on-month and a decrease of 40.00% year-on-year. From the situation in the second quarter, the cement, fiberglass, glass, and consumer building materials sectors had quarter-on-quarter revenue increases of +37% / +31.4% / +4.0% / +40.7%. C-end consumer building materials performed significantly stronger in the first half of the year, mainly due to the support of renovation demand brought by second-hand housing transactions. It is expected to continue in the second half of the year. With the elimination of the mid-term negative factors and the expected policy catalysts, considering the short-term valuation repair elasticity and fundamental performance, we recommend C-end consumer building materials leaders. On the other hand, with the production of overseas capacity, the elasticity of overseas profits in the second half of the year is also expected to materialize.
In the past five trading days (0826-0830), the CSI 300 index fell by 0.17%, and the building materials (CITIC) rose by 1.24%. In terms of individual stocks, China West Construction Group (+40.4%), Triumph Science & Technology (+26.4%), Quakesafe Technologies (+24.0%), Ningbo Xianfeng New Material (+17.6%), and Gansu Jingang Solar (+14.9%) had the highest gains.
With the elimination of the mid-term negative factors, we recommend C-end consumer building materials and overseas cement leaders.
According to Wind, from 0824 to 0830, the sales area of commodity housing in 30 large and medium-sized cities reached 1.6286 million square meters, an increase of 1.29% month-on-month and a decrease of 40.00% year-on-year. On August 23rd, Deputy Minister of Housing and Urban-Rural Development Dong Jianguo stated at a press conference held by the State Council Information Office that research is being conducted to establish a house physical examination, house pension fund, and house insurance system, and to build a long-term mechanism for comprehensive life cycle house safety management. The first batch of pilot cities includes Shanghai, Beijing, Xi'an, and other 22 cities, with the focus of the pilot being that the government establishes a public account. In addition, Wuhan and Zhuhai continued to launch property acquisition actions this week. As of now, more than 40 cities nationwide have expressed clear support for the policy of acquiring commodity housing. Tianfeng Securities believes that in the future, as the supply side of the real estate market gradually tightens and the growth of housing inspection and maintenance demand, C-end consumer building materials, inspection companies, and others are expected to fully benefit.
From the situation in the second quarter, the cement, fiberglass, glass, and consumer building materials sectors had quarter-on-quarter revenue increases of +37% / +31.4% / +4.0% / +40.7%, and year-on-year decreases of -22.7% / -11.6% / +0.8% / -6.6%. The decrease in fiberglass and consumer building materials is larger than in the first quarter, while cement has narrowed its decline. The net profit attributable to the parent company in the second quarter compared year-on-year decreased by -77.8% / -63% / -26.6% / -22.1%. In the second quarter, cement and fiberglass experienced a recovery in prices, but due to insufficient demand support, the overall effect of cement price increases was not good, and fiberglass and consumer building materials were affected by the decline in demand and price wars on the supply side. It is expected that the price in the second quarter will decline compared to the previous quarter. The profitability of the cement sector is already at the bottom, and companies' profit expectations will be stronger in the second half of the year. Supply-side efforts are expected to help push up prices, and the effect of fiberglass price increases is expected to be further realized in the third quarter. At the same time, the low base in the second half of last year is expected to continue to narrow the year-on-year decline in cement and fiberglass.
In the first half of the year, C-end consumer building materials varieties (Dehua TB New Decoration Material, Beijing New Building Materials, Zhejiang Weixing New Building Materials, SKSHU Paint) performed significantly better (with year-on-year revenue growth). This may be mainly due to the support of renovation demand brought by second-hand housing transactions, and it is expected to continue in the second half of the year. With the elimination of the mid-term negative factors, the expected policy catalysts are expected to gradually strengthen. Taking into account the short-term valuation repair elasticity and fundamental performance, we recommend C-end consumer building materials leaders. On the other hand, with the production of overseas capacity, the elasticity of overseas profits is also expected to begin to materialize in the second half of the year. We recommend China West Construction Group as the leading player in African cement.
This week's key recommended portfolio
Westchinacement (02233), SKSHU paint (603737.SH), Beijing new building materials public (000786.SZ), Dehua TB New Decoration Material (A-share code: 002043.SZ), Asia Cuannon technology (603378.SH), Tibet tianlu (600326.SH), China Jushi Co., Ltd. (600176.SH)
Risk warning: Infrastructure and real estate demand fell more than expected, affecting the rising trend of cement and glass prices; the downstream business climate and its own growth of new materials are lower than expected; bad debt impairment losses of the real estate industry chain exceeded expectations.
