Guoxin Securities: The bottom of the policy is shifting to focus on building materials valuation repair opportunities

The Zhitong Finance App learned that Guoxin Securities released a research report saying that recent policies have continued to be released positively. The policy tone has clearly changed to a positive and unprecedented level of strength. Follow-up policies still have room for strength, and they are concerned about the introduction and implementation of incremental policies. Short-term policies guide the shift in expectations, and market confidence is expected to gradually recover. As various policies continue to be implemented, policy effects will gradually become apparent, and it is expected that real estate will stop falling and stabilize further. Currently, the building materials sector as a whole is still in a slow repair stage at the bottom, and valuations and holdings are still at a low level. Continued implementation of short-term policies is expected to bring about valuation repairs. We also recommend focusing on leading brands such as Beixin Construction (000786.SZ), a leading producer of high-quality consumer building materials with strong growth; at the same time, focus on leading brands with improved demand expectations combined with marginal supply improvements, and bottom profit is expected to improve, recommend Huaxin Cement (600801.SH), etc.; focus on glass fiberglass faucet China Jushi (600176.SH), etc.; other segments focus on leading companies in the field of professional lighting (0024.27SZ) ).

Guoxin Securities's main views are as follows:

The policy tone turned positive, and attention was paid to subsequent incremental policies.

Recently, policies have continued to be favorable and unprecedented. The central bank lowered interest rate cuts at an accelerated pace, and sent a more positive signal to the market. Afterwards, the Politburo meeting of the Central Committee was positive in setting the tone for real estate, emphasizing for the first time “to stop the decline and stabilize the real estate market”. First-tier cities responded quickly and introduced new property market policies one after another, greatly boosting market confidence. On October 12, at the press conference of the State Information Office, the Ministry of Finance further clarified the “package” policy to support real estate, pointing out the direction for subsequent real estate policy adjustments, and focusing on the introduction and implementation of incremental policies. It is expected that market expectations will be further improved. The real estate market is expected to improve marginally. The growth rate of infrastructure investment weakened marginally from month to month. In September, the scale of special bond issuance reached a new high during the year. As the intensive issuance of special bonds accelerates, it is expected to promote the formation of more physical workload in the future. Considering that infrastructure investment is an important gripper for stabilizing the economy, fiscal policy still has a lot of room for strength, and attention is paid to the impetus that subsequent bonds will drive infrastructure.

Short-term demand recovery is limited, so focus on supply-side changes.

① Cement: Short-term demand recovery is limited, and the desire of enterprises to push up is still strong. Considering that the market is about to enter the final Q4 demand period, prices in most regions are still at a low level. Under the leadership of leading companies, all regions are still mainly promoting prices. At the same time, the Ministry of Ecology and Environment recently solicited public comments on the “National Carbon Emissions Trading Market Covering the Cement, Steel, and Electrolytic Aluminum Industry Work Plan (Draft for Comments)”. Cement plans to be included in the carbon trading market, which is expected to accelerate industry clearance in the medium term.

② Glass: Pressure on the supply side of float glass has been reduced slightly, but it is difficult to hedge against the impact of insufficient orders. The contradiction between supply and demand is still prominent. Prices are expected to continue to be weak in the short term, and further production capacity will need to be cleared in the medium term; the price of photovoltaic glass continues to fall under pressure. The demand side has improved recently, and the supply side continues to shrink, but the overall supply side is still in the oversupply stage. The short-term price increase support is limited, and the forecast is mainly stable.

③ Glass fiber: Demand for thick yarn has partially recovered. As the peak season gradually approaches, there are still strong and positive expectations in the automotive, wind power, electronic and electrical appliance sectors. Considering the increase and subsequent ignition expectations brought about by new ignition on the supply side, it is expected that short-term prices will rise but the increase will be limited; the short-term demand release for electronic yarn is limited, and the momentum for further growth is limited in the short term.

Risk warning:

The effect of implementing the policy fell short of expectations; the increase in supply exceeded expectations; and the increase in costs exceeded expectations.