According to the Zhitong Finance APP, Caitong Securities has released a research report stating that the relaxation of real estate policies may boost home-buying confidence, and destocking is expected to unblock the replacement chain, leading to a marginal improvement in demand for building materials. The firm recommends focusing on the building materials sector, with key recommendations: 1) Long-term outlook for the C-end: SKSHU (603737.SH), DEHUA TB (002043.SZ), Beijing New Building Materials (000786.SZ), Weixing New Materials (002372.SZ); 2) For rebounds, focus on the B-end: ORIENTAL YUHONG (002271.SZ), KinLong (002791.SZ), Qingniao Fire Protection (002960.SZ), China Jushi (600176.SH).
<h2>Caitong Securities' main viewpoints are as follows:</h2>
The resilience of the domestic demand sector is strong, and the advantages of defensive sectors are prominent
Since the escalation of Sino-U.S. trade frictions, &#34;expanding domestic demand&#34; has become the focus of current policies. The domestic demand sector shows strong resilience, with the growth rates of building materials/real estate/building decoration/food and beverage/agriculture, forestry, animal husbandry and fishery/banking sectors from April 3 to April 18 being -2.2%/1.8%/0.9%/0.4%/2.3%/2.0%, respectively. In contrast, technology-related sectors have been severely affected by trade frictions, with the growth rates of computer/electronics/automotive sectors being -6.0%/-4.1%/-5.6% during the same period. From the trading trend, it is gradually shifting towards defensive sectors.
A small spring has emerged, and real estate is an important lever for expanding domestic demand
Data shows that the macro economy achieved a good start in Q1, and a small spring in real estate has arrived. Q1 GDP grew by 5.4% year-on-year, an increase of 1.2% compared to Q4 of last year. In March, M1 increased by 1.6% year-on-year, marking four consecutive months of positive growth, while M2 maintained a 7.0% year-on-year increase. The special action plan to boost consumption, combined with the Ministry of Finance's promotion of urban renewal and debt reduction, has led to favorable monetary supply indicators. According to the National Bureau of Statistics, the national sales area of new homes in March was 110 million square meters, with sales amounting to 822.2 billion yuan, both showing a year-on-year decline of only 1%. Among them, data from CRIC shows that cities like Beijing, Guangzhou, Shenzhen, Ningbo, Nanjing, and Suzhou all had year-on-year growth rates exceeding 20%, indicating increasingly clear signals of stabilization on the demand side.
In March, the average year-on-year growth rate of second-hand housing transactions in core cities was 21%, with Shanghai and Shenzhen exceeding 40%, and Hangzhou's transaction volume doubling year-on-year. In terms of prices, the price of new homes fell by 5.0% year-on-year, with the decline narrowing for five consecutive months, while the price of second-hand homes fell by 7.3% year-on-year, with the decline narrowing for six consecutive months. CRIC predicts that the structural recovery in April is likely to continue, with the sales side in core cities continuing to recover. For cities like Wuhan and Nanjing, which have already undergone deep adjustments, the market is expected to stabilize in the short term, and subsequent transactions are likely to continue a weak recovery trend with steady growth.
Stockpiling is also progressing, and expectations for policy implementation are continuously being released
On April 15, Premier Li Qiang proposed during a survey at the Beijing Beitou Science and Technology Community Talent Apartment that acquiring existing homes for use as affordable housing is an important lever to promote the stabilization of the real estate market and to ensure and improve people's livelihoods. Future efforts should focus on implementing relevant policies, granting city governments greater autonomy regarding acquisition subjects, prices, and purposes, and promptly researching and launching new support measures. Based on the central government's clear guidance on stabilizing the market, expectations for the implementation of stockpiling policies are continuously being released. Coupled with the stabilization of transaction data in both the new and second-hand housing markets, residents' expectations for housing consumption are likely to gradually improve, driving a rebound in demand along the real estate chain
Risk Warning: Risks of macroeconomic downturn, decline in the real estate market, and rising raw material prices

002271

002043

603737

002791

Caitong Securities released a research report, suggesting attention to the building materials sector, believing that the relaxation of real estate policies will boost home buying confidence, and demand for building materials is expected to improve. It 重点推荐 C-end companies such as SKSHU and DEHUA TB, while paying attention to B-end companies such as ORIENTAL YUHONG and KinLong during the rebound. The domestic demand sector is resilient, and real estate is an important lever for expanding domestic demand. In Q1, the macro economy is performing well, with increases in transaction volumes for both new and second-hand homes in core cities

Zhitong

ORIENTAL YUHONG

DEHUA TB

SKSHU

KinLong

CAITONG SECURITIES

WEIXING NBM

JBIT

BNBMPLC

Building Material

Caitong Securities: The building materials industry focuses on stability and domestic demand, with real estate as an important lever