In 2011, the performance of building materials continued to increase by 26.13%, and the first quarter of 2012 accelerated its decline. Last year, the industry's total annual operating income was 269.216 billion yuan, a year-on-year increase of 10.63%, a significant decline from 31.78% in 2010, setting a new low in 11 years. However, in 2011, the industry realized a net profit attributable to the parent company of 89.502 billion yuan, a year-on-year increase of 26.13%, which was only 3.39 percentage points lower than the 29.52% in 2010. In the first quarter of 2012, affected by the sharp decline in fixed investment growth, the industry's revenue and profit growth accelerated. In the first quarter, the operating income was 500.553 billion yuan, down 2.44% year-on-year; net profit was 12.366 billion yuan, down 20.83% year-on-year. In terms of industry profitability and operational capability analysis , the worst performance is the ceramic plate, and the best performance is the decorative garden plate. In terms of profitability, in 2011, it contributed a lot to the income and profit of the entire industry. Infrastructure and housing construction, gross profit margin and net interest rate increased compared to 2010. In the first quarter of this year, the gross profit margin and net profit margin of most of the sub-sectors fell sharply. The largest decline was in the cement sector. The rise was only for pipes and infrastructure, but its net interest rate did not rise. Pipes are due to a significant increase in the management expense ratio and operating expense ratio, while the infrastructure sector is due to a substantial increase in financial costs. In terms of inventory, the best performance in 2011 was ceramic manufacturing, and the de-stocking ability of decorative gardens and infrastructure construction declined. In the first quarter of 2012, the best performance was in the pipe, and the worst performer was the decorative garden. Valuation analysis At present, the valuation premium of building materials relative to the CSI 300 Index is 109%, and the construction material valuation premium rate is higher than that of architectural decoration. The highest is the refractory plate, followed by the glass and decorative gardens, the lowest is ceramic. The valuation premium rate for refractory materials, pipes and specialty engineering is at a five-year high. The valuation premium rate for home construction, infrastructure and cement manufacturing is at a five-year low. Investment strategy suggests that because of overcapacity and cyclical downturn in the industry, it is difficult to obtain medium and long-term excess returns. The investment strategy should focus on timing and not fighting. Looking forward to the second quarter, the fundamentals of the industry will continue to rise, but the year-on-year growth rate is still falling. There is no positive catalyst for macro policy and funding, but due to the low valuation of the industry, it is expected that the stock price will be dominated by shocks in the short term, giving the industry a “neutral†rating. Compared with building materials, we are more optimistic about architecture. On the one hand, the scale of real estate and the entire infrastructure this year is hard to exceed expectations. A certain segment of infrastructure is more likely to exceed expectations. On the other hand, the current destocking pressure of building materials is still large, and prices still have a downside risk. Relatively optimistic has the following aspects: 1) Stable growth of professional engineering, it is recommended to focus on the Sinopec geotechnical engineering company that has large orders in the past quarter and the production capacity has entered the release period. 2) Public building decoration and decoration, mainly because of the stable growth of municipal engineering construction from the first quarter data, it is recommended to focus on Hongtao shares with better growth; 3) Road and bridge construction, mainly because of its high gross profit margin, local government The participation enthusiasm is high. It is recommended to focus on Sichuan Luqiao, which has sustained high growth in infrastructure business and has restructuring expectations.
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