In the short term, the epidemic will have an impact on building materials logistics and buildings, and the demand for steady growth of infrastructure will be further strengthened. The short-term impact of the epidemic on the building materials industry is reflected in three aspects: 1. Related factories and logistics are obviously affected. According to the epidemic situation in 2020, both the glass inventory and the operating rate of cement plants fluctuate greatly. 2. The business related to downstream infrastructure real estate construction is limited, and the industry data will drop sharply in 2020. 3. Community control leads to difficulties in home improvement construction, and the C-end sales of decoration building materials are affected. In the medium term, the epidemic has led to an increase in downward pressure on the economy, a significant decline in PMI data, and a significant increase in the government's willingness to steadily increase infrastructure investment. You can track the progress of the epidemic and PMI data, and grasp the investment rhythm of the relevant sectors with steady growth of infrastructure.
Short-term: the factory produces logistics, and the downstream construction is limited.
The logistics of glass products and the construction of cement industry are affected. Referring to the epidemic situation in 2020, as a continuous production industry, glass products cannot be shipped abroad due to limited logistics, and the inventory has risen sharply. After the Spring Festival in previous years, construction demand was at a low level and inventory was at a high level. 20 13-20 19 in the same period, the national inventory was 38-40 million heavy boxes. During the epidemic in 2020, the national inventory rose to 92.04 million containers, and there was a warehouse explosion in some areas, which led to the manufacturers' price reduction and clearance. In 2023, the epidemic spread in many places, and the inventory of the glass industry was significantly higher than in previous years. The start-up of cement grinding station also has great influence. 20 13 to 20 19, with an industry average of about 20%. In 2020, the national rolling mill operating rate will drop to zero, and the pace of recovery will slow down compared with previous years. After the outbreak in 2023, the speed of increasing the operating rate of rolling mills in China began to slow down.
Downstream real estate and infrastructure-related businesses are affected. During the epidemic in 2020, the real estate data was mainly affected by the growth rate of newly started area and sales area. In February 2020, the year-on-year growth rate was -44.9% and -39.9%, respectively, and the growth rate dropped by 52.3% and 38.2% compared with the previous month. The growth rate of transportation fixed assets investment and public facilities investment, which represent the infrastructure demand, is -30. 1%, and the growth rate decreases by 25.0% and 34.0% respectively. It is expected that during the epidemic in 2023, real estate and infrastructure construction will also be affected accordingly.
It is difficult to seal and control the epidemic situation, and the shipment of related building materials at the C end is affected. During the epidemic, due to the closed control of the community, many decoration building materials construction could not be carried out. Waterproof coatings, household plastic pipes, interior wall coatings, tiles, gypsum boards and other interior decoration materials need to be built at home. The closed control of the residential area makes the decoration construction impossible, and the shipment of the corresponding building materials C end is also affected. During the epidemic in 2020, the prosperity index of building materials and home furnishing dropped significantly, and the confidence index of managers in the building materials and home furnishing industry was also significantly affected. It is expected that during the epidemic in 2023, the decoration and building materials industry will also be affected.
Medium-term: Infrastructure stimulates demand to rebound, and the operating pressure of housing enterprises is enormous.
Affected by the epidemic, the downward pressure on the economy has increased, and the government
The periodic shape of similar building materials has changed, cement is longer and glass fiber is higher. In the past few years, the periodic shape of periodic building materials has changed obviously. The cement cycle has become "long", mainly because the demand-side real estate infrastructure policy is stable, and the growth rate has remained stable most of the time. Since 20 17, the supply industry has stopped kiln at different peaks, limited production by administration, strictly controlled production capacity by the New Deal, and improved cement profit rate with market cooperation. The industry has gradually entered a new state of high profit and stability, and its growth and periodicity have weakened, so the incumbent enterprises can enjoy the industry dividend. The main reason why the cycle of glass fiber becomes "high" is the ability of small and medium-sized enterprises in the glass fiber production industry to be more cautious in the overall weak external demand environment. Once demand improves, there will be a serious mismatch between supply and demand, and prices will rise sharply. The enterprise's head production capacity is more flexible and advantageous, and it can fully enjoy the periodic dividend.
Carbon emission reduction and energy consumption indicators started market-oriented supply-side reform, and cement glass fiber enterprises started category expansion. In the future, building materials sub-sectors such as cement will be included in the carbon emission trading market, and the carbon quota will be gradually tightened through the baseline method. Small and medium-sized enterprises have no obvious advantages in energy consumption and carbon emissions, and will face rising production costs or be forced to buy carbon sinks in the future. Recently, the National Development and Reform Commission (NDRC) released the energy consumption index level of the building materials industry, clearly proposing to eliminate low-energy production lines, which means that the second round of market-oriented supply-side reform of the industry has started, and the leading edge of the head enterprises is expected to be further reflected. However, cement glass fiber head enterprises gradually began to expand their categories, and the cement industry mainly expanded vertically with aggregate and concrete; Glass fiber is a horizontal expansion of high-end fields such as photovoltaic, wind power, electronics and new energy.
Redefinition of circle
In the past few years, the industry cycle has undergone tremendous changes. How to define a cycle? In recent years, with the change of external economic situation, the circulation forms of cement, glass and glass fiber have changed greatly. We believe that the prosperity of the industry cycle should be measured by the overall level of corporate profits. Among them, the cement boom is measured by the growth rate (water-coal price difference output), and the glass boom is measured by the growth rate ((glass unit price-soda consumption-natural gas consumption) sales); The prosperity of glass fiber is measured by the growth rate (unit price output of glass fiber).
Cement industry: profits enter the platform period.
/p & gt；
The cycle of cement and glass fiber is different. Looking back on the cycle of cement industry since 2008, we think that the change of cycle form of cement industry is different from that of glass fiber. The cycle of cement industry is weakened and becomes "long"; The cycle of glass fiber industry has been strengthened, and the cycle has become "big". The different forms of cement and glass fiber industries are driven by different industry logics.
Demand side: the policy orientation is stable, and the growth rate of real estate infrastructure demand remains stable. We believe that one of the original reasons for the long cement cycle is the intervention of policy and the stability of demand. Since the "930" regulation of real estate on 20 16, the policy has focused on real estate stability and infrastructure regulation. Before the "three red lines" in 2020, the demand growth rate of real estate infrastructure for cement industry will remain relatively stable, and the cement output will also remain relatively stable.
Supply side: limited production by administration, stopping kiln at peak shift, and strictly controlling new production capacity. The supply side is another important reason for the long cycle of the cement industry. The supply-side changes of the industry since 20 16 can be summarized as administrative production restriction, peak-shifting kiln shutdown and strict control of new capacity. The supply-side reform has reduced the effective supply of the cement industry and obviously eased the current situation of overcapacity in the cement industry. With steady demand and obviously reduced supply, the overall price of cement rose, and the price difference between water and coal expanded from 170 yuan/ton to 300 yuan/ton platform, and the profitability of cement enterprises improved significantly, ushered in the longest boom cycle in history.
The synergy of marketization has increased the prices of cement, conch clinker along the river and Xinjiang carbide slag clinker. 20 16 After the supply-side reform, the head enterprises in the cement slurry industry started industry cooperation under the guidance of relevant departments to maintain the order of the cement industry in various regions. In the environment of stable external demand and kiln shutdown at different peaks, the best choice for enterprises in the region is to participate in coordination. Cement enterprises in the Yangtze River Delta have effectively alleviated the impact of imported clinker on East China cement, and cooperative substitution in Xinjiang has effectively alleviated the impact of carbide slag clinker on cement prices in Xinjiang.
The cement industry has gradually entered a new stable state, and enterprises have maintained high profits, but their growth has weakened. Under the environment of stable external demand and the implementation of supply-side control policies, the peak-shifting kiln shutdown and industry synergy have strengthened the stability of the industry, and all incumbent enterprises can enjoy the industry dividend. At present, the cement price can be maintained at a high level, and the industry has entered a new stable state. We believe that the industry structure will be further stable in the future, and enterprises are expected to maintain a high level of profitability, but the growth brought by the cement business itself will be weakened.
Glass and glass fiber: due to product upgrading, the upward cycle is extended.
The upward cycle of glass and glass fiber industry has been extended, mainly due to the gradual emergence of high-end products. The recycling form of glass fiber industry is different from cement. The latest cycle is a big cycle that has never appeared in the history of the industry, and the upward cycle of the industry has been significantly extended. The main reason is that the downstream demand for product upgrading is high-end, and the continuous shortage of high-end products leads to the extension of the upward cycle. Mainly in glass fiber, the proportion of electric empty yarn, thermoplastic yarn and electronic yarn is increasing, and the added value of high-end products is high, which improves the profitability of enterprises. In glass and glass enterprises, the proportion of photovoltaic glass, electronic glass and deep-processed glass is increasing, and the profitability of enterprises is also improved by increasing the added value of products.
Small and medium-sized enterprises are cautious in putting in production capacity and cannot adapt to the changes in industry demand structure. Head enterprises fully enjoy the industry dividend. Another reason for the long upward cycle is that both glass and glass fiber are continuous production industries. With the external economy weakening, small and medium-sized enterprises are more cautious about the production capacity and cannot adapt to the high-end changes in industry demand. Therefore, in the face of demand changes, the contradiction between supply and demand is further aggravated, and large and medium-sized enterprises can better cope with downstream demand and fully enjoy the industry dividend.
Double carbon policy opens market-oriented reform
Building materials are expected to be included in carbon emissions trading.
In the future, building materials sub-sectors such as cement will be included in the carbon emission trading market. After years of pilot projects, China has formed a relatively mature carbon emission trading market, and the weighted average carbon price in recent two years is about 40 yuan/ton. As one of the major industries of energy consumption, the building materials industry is expected to gradually enter the carbon emission trading market in the future. Among them, the carbon emission of cement industry reaches 83% of the building materials industry, which is the sub-industry with the largest emission, and it is expected to be the first to be included in carbon emission trading.
In the future, it is expected that the baseline method will be gradually tightened and the share of leading enterprises will gradually increase. Referring to the previous pilot experience, we predict that the future quota calculation will adopt the baseline method (output× benchmark value× emission reduction factor), so enterprises with high capacity utilization rate or low emissions have more advantages, and small enterprises can only be forced to reduce production or purchase carbon emission rights, and their leading share will gradually increase.
Introducing backward production capacity into benchmarking level of energy efficiency
The level of industry energy consumption indicators is released, and low-energy production lines in cement, glass, ceramic tiles and other industries will be phased out. In 20021year, the national development and reform commission issued the benchmark level and benchmark level of energy efficiency in key areas of high energy-consuming industries (20021version), which put forward requirements for the benchmark level and benchmark level of energy efficiency in cement, glass, ceramic tile and other industries. Among them, the cement industry requires the industry to reach the benchmark level in 2025, and the production capacity accounts for more than 30%. According to the statistics of digital cement network, at present, 75% of the production lines in the industry have reached the benchmark level, and only 5% have reached the benchmark level. In the future, more production lines with low energy consumption indicators will be eliminated, and the glass and ceramic tile industries will also face the same situation.
It is estimated that the elimination of inefficient production capacity will reduce clinker production capacity by 8.2%. 202 1, Shandong province has made it clear that the production capacity below 2500t/d will be withdrawn by 50% before the end of 2022. We predict that the production line of cement industry below 2500 tons/day will gradually withdraw in the future. We select conch and other 14 head enterprises in cement industry as calculation samples. It is estimated that the national production capacity below 2,500 t/d will reach 43,500 tons, accounting for 24.5%. According to the replacement ratio of 1: 1.5, it is estimated that the withdrawal of this part of production capacity will reduce the production capacity by 1.45 tons, which is 8.2% lower than the current production capacity.
The second round of supply-side reform was launched, and the winners of the head enterprises took it all. We believe that carbon emissions trading and the withdrawal of energy consumption indicators will open the second round of supply-side reform of cyclical building materials. The first round of reform mainly focuses on administrative production restriction, and each enterprise reduces part of its supply, which is actually the expansion and contraction of the supply curve, which is manifested in the increase of the slope of the industry supply curve and the decrease of supply, but the incumbent enterprises can enjoy the dividend of the industry cycle. The second round of reform focused on market elimination, and carbon emission rights raised the cost of enterprises, leading to an upward shift in the supply curve; Eliminating backward production capacity directly reduces the supply of the industry, leading to the left shift of the supply curve. The fundamental difference with the supply side of the first round is that the tail enterprises directly withdraw from the industry, and the winners of the head enterprises take all.
Ways to reduce carbon emission in huaxin cement. About 60% of carbon emissions from cement industry mainly come from limestone decomposition. In order to achieve the goal of reducing carbon emissions, the White Paper on Low-carbon Development in huaxin cement proposes that methods such as replacing raw materials/fuels, integrated cogeneration, oxygen-enriched combustion technology and increasing the proportion of additives will be adopted to reduce carbon emissions. The company plans to reduce the carbon emission per ton of cement to 166kg in 2060, which is 74.5% lower than that in 2020. The carbon emission of unilateral concrete will be 43kg, which is 78.6438+0% lower than that in 2020.
Periodic building materials enterprises actively expand categories.
Cement enterprises began to expand horizontally, and glass fiber enterprises began to expand vertically. In recent years, periodic building materials have begun to show a trend of vertical and horizontal expansion. Among them, the cement industry mainly develops the vertical development of aggregate and concrete, the glass industry mainly develops electronic glass, photovoltaic glass and medical glass, and the glass fiber industry mainly develops the horizontal expansion of wind power wires, thermoplastic wires and high value-added electronic wires.
High profits, low growth and low dividends of enterprises form idle resources, which is the main reason for vertical expansion and horizontal expansion. We believe that the main reason for enterprise expansion is the gradual weakening of the growth of the original traditional business. Take cement as an example. However, the return on net assets in the cement industry is maintained at around 20%, and the profit growth rate is declining year by year. Cash on hand is relatively high, but the dividend rate is only maintained at 30-40%. Without external investment, resources will be idle.
The vertical expansion of cement enterprises will increase their anti-cyclical ability, and the horizontal expansion of glass fiber is expected to open the second growth curve of enterprises. We believe that with the vertical expansion of the cement industry along the upstream and downstream, corporate profits will increase with the expansion of aggregate and concrete related businesses. From a longer-term point of view, the upstream and downstream linkage has resisted the impact of price fluctuations of raw materials and products on enterprises to a certain extent, and the future impact on enterprise performance mainly comes from the sales volume changes brought about by cyclical demand fluctuations. The expansion of glass fiber into high-end fields such as photovoltaic, electronics and wind power will open up a second growth curve for enterprises, and there is room for further growth of corporate profits.
The demand for new real estate has slowed down, and the stock of real estate and infrastructure has brought new markets.
The demand for real estate slowed down and the industry entered a platform period.
The growth rate of completion slowed down, and the demand of decorative building materials industry entered a platform period. In 2020, the output value of building decoration industry 1. 1.5 trillion, Yoy 7.0%, is as tired as the completion of real estate. With the slowdown of the output value of decoration industry and the growth rate of housing completion, the demand of decoration building materials industry has also entered a platform period. We selected four common decoration building materials: waterproof, pipeline, ceramic tile and paint to judge the demand of overall decoration building materials. The growth rate of waterproof production decreased from 1 1 to 3.9% in 2020; The growth rate of pipe production decreased from 44.8% in 20 10 to1.6% in 2020; Ceramic tiles decreased from 22.9% in 2006 to a minimum of 2018-11.2%; Architectural coatings will decrease from 34.4% in 20 10 to 3.0% in 2020. /kloc-in the past 0/0 years, the growth rate of the main decoration building materials industry has shown a downward trend.
Real estate decoration policy since 2020: Since 2020, domestic real estate has experienced high-intensity supervision. From the "three red lines" in August 2020 to the centralized loan restriction of real estate loans in February 2020, both the demand side and the capital side of housing enterprises are under great pressure. February 20021year "dual centralized land supply" means that the real estate supervision and rectification efforts have entered a new height. 20021April and July, the Political Bureau and the Ministry of Housing and Urban-Rural Development reiterated that they should not speculate on housing and continue to strengthen the supervision and rectification of the real estate industry.
The reorganization of the real estate industry has led to the breaking of industry concentration, the infiltration trend of hardcover houses, the future growth of real estate demand channels and the optimization of structure. The supervision of the real estate industry has also led to the trend of industry concentration and the trend of infiltration of hardcover houses being disrupted. 202 1 the concentration of real estate sales area decreased for the first time since statistics were available in 2009. The main reason is that the credit risk ranking of some private large-scale housing enterprises has declined, resulting in fluctuations in the data of sales area concentration. According to the data of Aowei Cloud, the opening volume of hardcover houses in 20021year was 286 1 10,000 sets, down 12.0% year-on-year. The hardcover housing market space has also experienced a decline. We believe that the supervision of the real estate industry and the release of risk events will lead to the reshuffle of the industry grid, and new giants will appear in the future housing enterprises, and the industry concentration will be re-enhanced. As a long-term policy direction, the scale and penetration rate of hardcover housing industry are also expected to stop falling and pick up. However, with the area of stock room reaching a new high, we believe that the total amount of big B-end channels represented by real estate is unlikely to increase significantly in the future, and the structure is expected to be optimized.
The increase in stock houses hedged the downside risks.
It is estimated that in 20021year, the national stock housing area will reach 94 billion square meters, and the growth rate of completed area in the stock housing area will decrease year by year. According to the urban and rural housing stock situation disclosed in the Statistical Bulletin of Urban Housing Survey in 2005 and the Statistical Bulletin of Urban and Rural Construction in 20 16 by the Ministry of Housing and Urban-Rural Development, combined with the completion of urban and rural housing announced by the Ministry of Housing and Urban-Rural Development every year, assuming a certain demolition rate and urban-rural conversion ratio, we can calculate the current situation of the national housing stock. We estimate that in 20021year, the construction area of national stock housing was 94 billion square meters, including 70.8 billion square meters of housing, including about 4 billion square meters of urban housing and 30.7 billion square meters of rural housing. 65.438+072 billion square meters of urban non-residential and 5.9 billion square meters of rural non-residential. In 202 1 year, the proportion of completed housing area to the existing building area was 5.2%, and the proportion continued to decline. We believe that when the housing needs of the original domestic residents have been met, and the proportion of the completed area to the existing building area has decreased, it indicates that the proportion of new building needs in decoration building materials will gradually decrease, while the demand for renovation of old houses will gradually increase.
It is expected that the demand ratio of stock houses will increase in the future. Taking ceramic tile as an example, according to the data of ceramic net, China, we predict that 27.5% of ceramic tile demand in 20 17 will come from existing buildings, 63.6% will still come from new buildings, and 8.9% will come from exports. We assume that in the future, the completed housing area will gradually decrease year by year, and the export will also show a slow downward trend with the gradual reduction of domestic production cost advantages, and the decoration demand of stock houses will increase synchronously with the increase of the number of stock houses. It is estimated that in 2025, the demand for renovation of existing houses, new houses and export will account for 35.6%, 58.3% and 6. 1% respectively. The downstream demand structure of other decorative building materials may face a similar situation.
The municipal demand for infrastructure has become a new battlefield.
Infrastructure investment has improved in the short term, but it is not sustainable in the long term. Under the background of increasing downward pressure on the economy, the growth rate of infrastructure investment in 2022Q 1 0.5%, reaching a new high of 20 18Q 1, regardless of the base utility. We believe that the current level of government stock debt is relatively high, and long-term infrastructure stimulus is unsustainable.
Channel sinking and category expansion are the only two choices to embrace change.
Channel reform-centralized mining catalyzes the concentration of B end, and the space at C end is expected to improve.
Under the catalysis of centralized mining of real estate, the concentration of leading enterprises in various sub-categories has obviously continued to increase. In recent three years, the centralized purchase of real estate hardcover houses and the improvement of the concentration of housing enterprises have given birth to the initial improvement of the concentration of various building materials. According to production and sales statistics, from 20 14 to 2020, the market share of the three leading waterproof companies will increase from 8.5% to 32.5%; Ceramic tiles increased from 1. 1% to 4.4%; The market share of the two leading paint enterprises increased from 3.5% to 25.4%; The market share of the four major pipe manufacturers increased from 17.0% to 23.6%. The concentration of leading enterprises in each sub-category has obviously continued to increase.
The concentration of gypsum board, waterproof and pipeline was improved ahead of schedule, and the pattern of gypsum board, waterproof and coating industry was relatively stable. The progress of concentration in different sub-sectors is different. The data of the first choice rate of building materials in the top 500 housing enterprises show that the head enterprises in gypsum board, waterproof and pipeline industries have obvious advantages, and the concentration has improved rapidly. However, the concentration of ceramic tile enterprises is progressing slowly, but there are also relatively stable head enterprises and second echelon enterprises. In terms of stability, the concentration pattern of gypsum board, waterproof and coating industries is relatively stable at present, among which Beixin Building Materials, Dongfang Yuhong and Nippon Longyi have relatively stable positions.
The proportion of pan-C demand has increased, and specialized channel companies are expected to appear. With the increase of stock houses, blank houses will become an important demand increment for decoration building materials, and the proportion of pan-C-end demand will be greatly increased in the future. 202 1 the improvement of the retail channel data of home improvement building materials fully shows that there is still room for improvement in the demand for C-end building materials. Considering that the domestic decoration is mainly decoration companies, the small B-end in the pan-C-end is an important growth force of retail demand. We believe that C-end customers are more dispersed than B-end customers, and their bargaining power is weaker than that of manufacturers. With the increase in the proportion of C-end demand, it is the only way for large platform institutions to buy out suppliers and provide price concessions.
Compared with the United States, platform companies are more in line with China's national conditions. Referring to the United States, under the environment that the proportion of existing homes is gradually increasing and the proportion of C-end demand is gradually increasing, a large-scale direct home chain platform has appeared in the United States, in which the DIY customers of The Home Depot and Lloyd's account for 55% and 75% respectively. Compared with China, the labor price in the United States is higher, the proportion of DIY customers is significantly higher than that of professional customers, and the domestic small B-end has more room for growth. It will be more feasible for the platform company to provide services to the small B terminal, and Jianlang Hardware is a typical representative embryonic company.
Category expansion-the only way for leading enterprises to grow.
The growth rate of the industry is slowing down, and horizontal expansion is the only way. We believe that category expansion is the only way when the growth rate of the industry slows down. However, different building materials have different industries and product attributes, and the horizontal expansion of enterprises has a certain path. Specifically, we think that the unit value of ceramic tile industry is relatively low compared with other decoration building materials, which has a certain regionality, the ceiling of industry concentration is relatively low, and the downward trend of the industry is also obvious. In the future, there is also a higher demand for horizontal expansion and category expansion. From the financial data, the comprehensive profitability of waterproof, coating and gypsum board is high.
From the financial data, decoration building materials are generally lighter than assets, among which gypsum board is heavier than assets, and the profit rate is higher; Light sheet assets can't form scale effect, and the profit rate is relatively low. Waterproof, ceramic tiles, pipes, hardware and other building materials have a relatively high proportion of B-end channels, and the overall accounting period level is high, and the negative debt ratio of the coating industry is high. Based on all kinds of data, the comprehensive profitability of waterproof, coating, plate, ceiling and gypsum board is high.
Combined with industry attributes, tiles and pipes have less significance. Combined with the judgment of industry attributes, we think that the track enterprises with high product standardization and strong functional attributes are relatively easy to cut in, while the track enterprises with strong decorative attributes and high personalization have no obvious scale benefits, so it is of little significance to change careers. However, the track with strong engineering channel attributes is easier to cut in quickly to achieve rapid product volume, and the track with strong retail channel attributes needs more time to deepen brand management. Based on the comprehensive judgment, we think that it takes a long time to establish the inventory at the initial stage and the switching significance is relatively small because of the high SKU, complex product segmentation category and small scale effect.
Comprehensive judgment shows that waterproof and painting are cost-effective tracks. At present, many leading players choose to cut into waterproof tracks. Comprehensive judgment waterproof, paint, gypsum board cut into the cost-effective track. Considering that gypsum board is the main product at present, the remaining waterproofing and coating are the better direction; Among them, waterproof engineering has strong properties and is easy to cut in quickly. Judging from the current penetration situation of single products in building materials enterprises, Yuhong chose coatings, while other leading enterprises such as Beixin, Sanshu and Yashi Chuangneng chose to cut into waterproofing. Wei Xing adheres to the concentric circle strategy, mainly cutting into indoor waterproofing at the C end, which is relatively stable and takes longer to see the results. Tutu chose to cut into the gypsum board. At present, Oriental Yuhong has a layout in waterproof, coating and insulation board, which has achieved a relatively leading position in the industry and has great growth potential in the future.
The advantages of leading enterprises lie in channel coordination and cost control. With the expansion of various categories of building materials, there is a trend of single product penetration in the industry. Under the trend of concentration of each track, different track leaders compete directly in the head of the same segment because of category expansion. The most typical ones are waterproof Oriental Yuhong and Beixin Building Materials. Beixin building materials quickly cut into the waterproof industry through large-scale acquisition. We believe that the key to the success of head enterprises lies in channel coordination and cost control. Enterprises with strong channel capabilities can quickly launch new products and quickly form scale advantages through cost control capabilities.
Overseas experience: strong cognition, strong execution, and will eventually grow.
Overseas leaders maintain medium-high growth. We believe that overseas expansion is the ultimate stage of the development of building materials enterprises in the future. At present, several major categories of building materials have formed a global leader, namely waterproof/water reducer Sika; Mohawk of tiles; Gypsum board's excellent Giboreau glass/gypsum board's Saint-Gobain; The basis of coatings. Judging from the financial data, the global building materials leader still maintains medium and high-speed revenue growth.
Overseas leaders have achieved rapid horizontal expansion through large-scale acquisitions. Looking back on the development of overseas leading building materials, there are two characteristics: 1. Realize overseas allocation and multi-category layout through large-scale acquisition, 2. Product and regional diversification. Driven by domestic concentration and category expansion, enterprises have grown to a new bottleneck, and overseas expansion is the ultimate stage of enterprise growth. In the face of some relatively mature overseas markets, rapid mergers and acquisitions can quickly cut into overseas markets and obtain business resources and production factors with comparative advantages. Even at present, overseas leaders are constantly acquiring and integrating global high-quality resources and consolidating their own advantages.
Overseas enterprises have the first-Mover advantage, but domestic enterprises have more room for growth. We believe that the essence of overseas expansion of enterprises is to acquire and integrate production factors with comparative advantages on a global scale in order to create value and consolidate their own advantages. Overseas enterprises grow earlier, have the first-Mover advantage and form a relatively stable pattern. At present, domestic enterprises still have cost advantages. As the domestic market slows down, there is huge room for overseas growth in the future. The market situation has been complicated for a long time, and companies in the field of decoration and building materials have been constantly adjusting their strategies to seek long-term growth. As a leader in the waterproof industry, Oriental Yuhong has repeatedly responded quickly at the key nodes of market changes and maintained an upward trend, which is a model worthy of learning by companies in the industry.
Grasp the market trend and have a long-term strategic vision. In 2008-20 1 1 year, stimulated by the "4 trillion" policy, the company successively contracted national key projects such as high-speed rail. Infrastructure investment slowed down in 20 12, and the company adjusted its customer structure, established long-term strategic cooperative relations with large real estate developers, and further expanded national channels. In 20 16, the company implemented PS strategy and partner system, and actively seized market share based on scale. 20 18 under the pressure of real estate control policy, the company changed from PS strategy to high-quality development, and began to pay attention to management quality, and at the same time adjusted the organizational structure to develop multi-category building materials products and services. In 2020, the company adjusted its organizational structure again, focusing on the sinking market, and at the same time launched the "investment for orders" model on a large scale, binding regional government resources and actively grasping non-housing business in parallel. The management of the company actively embraced the changes in the environment and market, and adjusted its development strategy several times in time, thus maintaining the company's long-term good operation and rapid growth.
Sound execution, showing strength. The performance of a company can usually directly reflect the effectiveness of its development strategy. Generally speaking, during the period from 20 12 to 202 1, the company's revenue and net profit attributable to the mother were 30.2%/410.2% respectively, and the growth rate of net profit attributable to the mother remained above 20% all the time, so the company's operation was improving for a long time. By stages, taking 20 18-2020 as an example, the company's strategic adjustment was put into place. In 20 18, the company's strategy no longer put scale first, put forward high-quality development, and included income, profit and accounts receivable in the assessment. From 20 19 to 2020, the company's cash flow improved significantly, far better than other companies in the same industry, and the company's strategy was effectively implemented at the corresponding development stage.
With both cognitive ability and executive ability, the future growth can still be expected. The long-term market performance of Oriental Yuhong reflects the company's cognition and execution of the industry and market. Due to changes in industry channels, the company's growth expectations are still considerable. It is understood that in the B-end income structure of 202 1, the proportion of non-housing has increased from about 30% in 2020 to about 50% in 202 1, with an increase rate of more than 50%, mainly due to regional integration companies. The change of B-end income structure once again verified the feasibility and effectiveness of the company seeking the growth logic of non-housing business. With excellent cognition and execution, Oriental Yuhong will gain more growth share in this industry channel reform and further stabilize its leading position in the industry.
(This article is for reference only and does not represent any of our investment suggestions. See the original report for information. )
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