CICC's total volume and industry jointly interpret this.
Risk: Policy changes or fundamentals repair is less than expected; the impact of the epidemic exceeds expectations.
macro
quasi-financial helps the economy to repair
8 economic data, the most impressive performance was fixed asset investment, among which the significant improvement in infrastructure and manufacturing investment hedged the downward pressure on real estate and drove the overall investment recovery. Industrial production also performed well. Although it was disturbed by high temperatures and power limits, it had little impact overall. Consumption and exports performed relatively weakly, among which consumption, under the recurrence of the epidemic, improved less than seasonality; exports were dragged down by foreign demand (and influenced by base), and the growth rate declined significantly. Looking ahead to this year, the improvement of domestic demand under the policy efforts may support economic recovery: the implementation of policies to stabilize growth and the formation of physical work may drive infrastructure investment to maintain a high growth rate; and the active adjustment of real estate policies may also mean that the weak real estate situation is expected to improve. The epidemic disturbance may be inevitable, but the recovery of employment and income under the policy boost will help support the stable growth of consumption. At the production end of
, the impact of high temperature and power limit on the industry is smaller than the same period last year. The automobile manufacturing industry continues to be in a high prosperity, and weak exports have a drag on production. 8 industrial added value in August growth rate improved by 0.4 percentage points compared with July. Although there are high temperatures and local power and production restrictions, the impact on industrial production is significantly smaller than the same period last year. The decline in exports drove the growth rate of the electronic equipment manufacturing industry, which accounts for a relatively high export share, to 5.5%, and the growth rate of the overall export delivery value of the industrial industry also fell by 4.3 percentage points.
demand side, infrastructure and manufacturing investment hedges downward pressure on real estate, and the growth rate of fixed asset investment has improved slightly. htmlFixed asset investment growth rate improved by 3 percentage points in August, of which the growth rate of infrastructure and manufacturing investment improved by 3.9 and 3.1 percentage points, and real estate investment fell by 1.5 percentage points. Specific sub-items:
► has increased its efforts to stabilize growth, infrastructure investment rebounds significantly, and quasi-fiscal effects have emerged. The allocation of special bonds issued centrally in the 72nd quarter has been accelerated, financial institutions have increased their support for infrastructure, and project approval supervision has been significantly effective. However, the high temperature and power shortage in mid-to-early August affected the construction. As the high temperature weather gradually "reduces fever", the physical workload of infrastructure is expected to be accelerated in September.
► 's early high exports and low base in August supported the improvement of manufacturing investment, and the growth rate of investment in new energy, automobiles, chemicals and other industries has improved a lot.
► further weakened in August, and the newly started construction area of fell by 45.7% year-on-year, the extreme decline in the past 20 years.Various policies to stabilize expectations, promote demand, and ensure housing subsidy have been actively introduced. Since April, various regions have issued a total of 425 loose regulatory measures. In August, the special loan support policy for guaranteeing housing subsidy has been extended, and local relief policies have been put into operation to stabilize housing purchase expectations. Finance’s support for real estate is also increasing. In August, the year-on-year growth rate of commercial housing sales area improved by 6.3 percentage points to -22.6%, and residents' home purchase sentiment was marginally restored while being cautious.
has raised the growth rate of consumption, and factors such as the rebound of the epidemic and the pressure on real estate have dragged down consumption recovery. 8 total retail sales in August grew by 5.4%, an improvement of 2.7 percentage points from July. However, this growth rate was mainly supported by the base, and the three-year compound growth rate fell by 0.5 percentage points from July. The pressure faced by consumption comes from two aspects: on the one hand, the resurgence of the epidemic has suppressed the rebound in consumption, and on the other hand, the pressure on real estate has dragged down the overall economy and residents' income, and suppressed real estate-related consumption such as furniture, construction and decoration. We believe that future consumption recovery may face disturbances in the epidemic, but the active introduction of real estate relief policies will help further improvements in residents' employment and income; consumption stimulus policies such as automobiles will also promote the maintenance of high growth in related consumption.
strategy
August data shows signs of improvement, and pay attention to subsequent trend changes. According to financial data, although the growth rate difference between M2 and social financing has not improved significantly, the new social financing of 2.4 trillion yuan is slightly better than market expectations. Various growth data still show that the current phased pressure is relatively high. The year-on-year growth rate of exports in August has declined. Overseas markets are entering a recession from stagflation, and the impact on China's foreign demand has begun to be reflected in the data. The interim results of
have been disclosed, and the profits of A shares have achieved positive growth, and the structural differentiation is obvious. The full A/financial/non-financial profit in the second quarter increased by 2.7%/4.9%/1.2% year-on-year. Combined with the macroeconomic environment, A-share profits are slightly better than market expectations. At the structural level, there is obvious differentiation. The high growth of upstream profits contributes a lot to overall profits, while the growth of mid- and downstream profits is still weak; the proportion of upstream to non-financial profits has risen to a high level since 2013, and the differentiation of upstream and downstream ROE and net profit margins has also reached a high level. At the same time, the analysis of three A-share statements is worth paying attention to:
1) Since 2021, the gross profit margin of A-shares non-financial petrochemicals has continued to decline, and the net profit margin has remained stable. Thanks to the decline in sales and financial expense rates after the epidemic in 2020, the sharp decline in sales expense rates may reflect a decline in operating activity, so we need to pay attention to the impact on asset turnover speed;
2) Overall Asset turnover rate is affected by the upstream Industry support is still at a high level, while the new economy has declined for four consecutive quarters and is lower than the level in 2020. The turnover rate of fixed assets + construction projects decline may reflect a decline in capacity utilization efficiency. We need to pay attention to the subsequent impact of asset turnover rate on ROE;
3) Under the background of loose credit environment in the second quarter, the proportion of cash flow has not increased significantly, which may restrict the recovery elasticity of the capital expenditure cycle. We believe that the positive growth of A-share earnings in the second quarter should not be ignored. Combined with the current domestic and foreign macro factors that still have a great impact on growth, and the characteristics presented in the current three statements, the elasticity of future performance recovery may be restricted. The month-on-month improvement of non-financial profits in the second half of the year may face challenges, and further policy efforts are still needed.
combined with the August economic data and the performance of listed companies, we see that in terms of the performance of the capital market, the domestic market has performed poorly and lacks opportunities since the third quarter, but the overall performance of the stable fundamentals and low valuation style is relatively leading. The CSI dividend index , which represents high dividends, has performed well recently, while the manufacturing growth industry with a large increase in growth in the previous period has increased. The repeated local epidemics in China and the secondary bottoming of real estate sales , as well as the drag of the downward trend of the international geopolitical situation and overseas economic cycles, have brought certain constraints on the domestic economic recovery, and the macro risks and uncertainties have increased. This is the main reason why we continued to emphasize "stability" and then "progress" at the beginning of the second half of this year, focusing on areas with low valuations, policy support or low correlation with the macro.At the same time, the further easing of domestic macro liquidity and the downward return on capital has affected the risk-free interest rate and the decline in capital interest rates. Against the background of scarce opportunities in high-return assets and high-prosperity industries, assets with relatively stable operations, stable dividends and high dividend yields have received more attention. Domestic REITs funds outperform most major assets, and the mid-to-high dividend sectors of the stock market have also performed relatively.
's mid-term trend does not have to be too pessimistic, and pay more attention to the structural level opportunities. Looking ahead to the future market, we believe that the recurring and continuous local epidemics in China may reduce the overall turnover rate of enterprises for a long time. China has entered the post-real estate era and the economic influencing factors are more diverse. The overseas cycle is down, and the market capital interest rate is lower. However, the overall risk preference of and the insufficient may be the main feature of the current stage. At present, we reiterate the view that "stable" and then "progress". It is expected that the weak fundamental recovery elasticity may still bring certain constraints to the market's performance at the index level in the future. However, combined with the valuation of blue chip indexes such as Shanghai and Shenzhen 300 and Shanghai Stock Exchange 50, the valuation of blue chip indexes such as Shanghai and Shenzhen 300 equity risk premium has rebounded to around the standard deviation of the historical average upward. There is no need to be too pessimistic about the medium-term trend, and pay more attention to the structural level opportunities. The potential systemic turning point in the market in the future requires attention to the policy support on the demand side, and may need to see whether there are more supply-side policy adjustments to restore confidence and rebuild market vitality. In terms of
configuration, low valuations, high dividends, stable growth-related sectors that reflect the low correlation between international supply and demand or macro risks may still have certain relative returns; growth style has performed poorly recently and may still fluctuate in the future. The opportunity to switch to growth of strategic style needs to pay attention to the progress in overseas inflation and China's stable growth.
fixed income
8 economic data in August was better than expected, especially consumption continued to rebound, and industrial production showed a certain resilience, but the decline in real estate investment further expanded. Infrastructure investment continued to make efforts in August, and infrastructure investment rose from 11.5% to 15.3% in a single month. At the same time, the automobile industry maintained a high prosperity. In August, the year-on-year growth rate of industrial added value of the automobile industry increased from 22.5% to 30.5%, and in August, the automobile retail sales rose from 9.7% to 15.9% year-on-year. Policy factors played a supporting role in the economy. However, the real estate market was still accelerating its downward trend in August, and the epidemic situation in some regions was still repeated. Coupled with high temperatures and power restrictions in some provinces and cities, the overall economic growth was still disturbed. From the perspective of demand, in terms of consumption, policies continue to support automobile consumption, but real estate-related consumption is sluggish; in terms of investment, infrastructure investment continues to rise to a high level, but real estate investment continues to decline; in terms of foreign demand, overseas demand continues to slow down, and exports are accelerating. From the perspective of output, industrial output is running smoothly at a low level, some mid- and upstream output has improved, while some downstream have maintained rapid growth; the output of the service industry is still low, partly due to the disturbance of the epidemic and partly due to the sluggish real estate.
As the policy of stabilizing growth continues to be strengthened, the policy’s role in economic support has become more obvious, but economic growth still has headwinds. In addition to the continued recurrence of the epidemic and the continuous slowdown in foreign demand, more importantly, the real estate market is still declining. The current real estate policy continues to relax, but residents' confidence in buying houses is still insufficient, and commercial housing sales have not yet seen a significant turning point, which means that real estate may continue to put some pressure on economic growth. Recent policies have promoted lowering deposit interest rates, which will also help reduce liability costs. Although funds may be disturbed at the end of the quarter, the loose capital may continue. For short-term and credit, we still recommend active allocation; although short-term policies support the economic stabilization, the risks in the short-term real estate market may still exist, and economic growth expectations may be difficult to significantly increase in the short term, and long-term interest rates will still tend to decline. We continue to recommend paying attention to long-term trading opportunities.
Commodity
Energy: The epidemic disturbance reappears, production is lower than expected
Epidemic disturbance reoccurs, and my country's refined oil consumption continues.html In August, China's apparent consumption of refined oil recorded 11.94 million barrels per day, a slight decrease of 1% month-on-month, and the year-on-year decline further expanded from -9.7% last month to -12.1%. Based on high-frequency data in the industry, we believe that the repeated disturbances of local epidemics to residents' travel and air traffic may be the main reason. In addition, some of the declines are due to the drag on the consumption of asphalt by the decline in real estate construction. Based on the segmented data of my country's oil consumption, the decline in gasoline demand is the main drag on the year-on-year decline in oil demand in July. In July, my country's apparent gasoline consumption recorded 2.68 million barrels per day, a year-on-year decrease of 16%. It can also be seen from the delayed traffic congestion in major domestic cities that the city's travel situation in Beijing, Shenzhen and other cities showed a significant decline in mid-July, which had a significant drag on the domestic congestion delay index of 100 cities. It did not show marginal improvement until early September, mainly due to the recovery of travel in Beijing, Shanghai and other places. In addition, residential air travel has been repaired month-on-month, but there is still room for repair compared with the same period last year. In July, my country's apparent consumption of aviation kerosene was 370,000 barrels per day, an improvement of 55% month-on-month, but it still decreased by about 31% compared with the same period last year. Based on the high-frequency data of my country's flights, the actual number of domestic flights implemented in July increased significantly month-on-month, but with the repeated outbreak of the epidemic in mid-August, air travel was also disturbed again. The number of domestic flights in August decreased by about 12% month-on-month. In addition, the demand for asphalt continues to be weak year-on-year. In July, my country's apparent consumption of asphalt was 910,000 barrels per day, continuing to decline month-on-month, a year-on-year decrease of about 28%. Since the beginning of the year, my country's asphalt consumption has continued to be poor, and there has been a significant differentiation with the investment trend of road construction that maintained positive growth year-on-year. We believe that the decline in the real estate cycle may be the main reason for the drag on asphalt consumption in the field of construction waterproofing materials. From January to July 2022, my country's average asphalt consumption was 960,000 barrels per day, an average year-on-year decrease of about 31%. During the same period, highway construction investment was still in the year-on-year expansion range, with the cumulative investment from January to July increasing by about 9% year-on-year. In contrast, since March 2022, my country's real estate construction area has declined to negative range year-on-year in the same month, which is relatively consistent with the trend of the year-on-year growth rate of asphalt consumption. Looking forward, as of mid-September, the urban transportation situation in my country has recovered to a certain extent, but the repeated epidemic situation in Shenzhen and other places may bring new uncertainty, and aviation travel has not improved significantly. We judge that domestic refined oil consumption may not return to the year-on-year expansion range in September, but the marginal improvement of industrial production may provide certain support for the demand for industrial oils such as diesel. We saw that the PMI index in August increased slightly month-on-month to 49.4, of which the new order index also recovered to 49.2.
oil and gas production is lower than expected, crude oil imports have improved month-on-month and cost pressures have been alleviated. In terms of supply, my country's oil and gas output in August was lower than expected, with crude oil output of 4 million barrels per day, a decrease of 44,000 barrels per day on the previous month, and also turned from rising to falling year-on-year; natural gas output was 17 billion cubic meters, a slight decline from month to month, and the year-on-year growth narrowed to 7.1%. At the same time, my country's crude oil imports increased month-on-month in August, while natural gas and imports remained basically the same, but were still in the year-on-year contraction range. In August, my country's net crude oil imports were 9.54 million barrels per day, a year-on-year decrease of 9.4%, and a month-on-month increase of 715,000 barrels per day. At the same time, it can be seen that the unit cost of my country's crude oil import showed a significant marginal decline. With the correction of international oil prices, the year-on-year increase in the unit cost of imported crude oil in my country in August fell from 53% last month to 41%. In contrast, the cost pressure on the import side of natural gas has not been significantly alleviated. In August, the unit cost of natural gas imports increased by 48% year-on-year, further widening from the 36% increase last month. Therefore, it can be seen that my country's net imports of natural gas in August were 12.3 billion cubic meters, a year-on-year decrease of 15.2%, and basically the same month-on-month. In terms of coal, coal supply is still at a high level. In August, the raw coal production was 370.44 million tons, an increase of 8.1% year-on-year, a growth rate of about 8 percentage points lower than the previous month. The average daily coal production was 11.95 million tons, a decrease from the 12.02 million tons last month. Under the factors such as the epidemic in major production areas such as Shaanxi, maintenance of the Daqin line, and strengthening safety supervision pressure, we expect coal supply may be tightened in the short term. Although the inventory days in the eight coastal provinces have rebounded to about 15 days, we expect that there will still be some pressure to restock inventory in the off-season this year.In terms of imports, customs data showed that in August, coal and lignite imported 29.456 million tons, a month-on-month increase of 25.2% and a year-on-year increase of 5%. Affected by the risks of natural gas supply in Europe, the prices of high-calorie coal such as Newcastle overseas remained at high levels. However, from the perspective of unit calorific value price, the low-calorie coal prices in Indonesia and other places are no longer expensive than in China, and the import window may gradually open. Judging from shipping data, after the European embargo on coal from Russia was implemented, Russian coal also accelerated its circulation to Asia, which also put some pressure on Indonesian coal prices. We expect coal imports to continue to increase compared with the previous period, which will supplement domestic supply. In terms of coal demand, the high temperature weather in August continued to support coal demand at a high level, with electricity generation in August increasing by 9.9% year-on-year, of which thermal power increased by 14.8% year-on-year, while hydropower fell by about 11% year-on-year. However, electricity consumption in manufacturing and industrial coal are still relatively weak, with cement production in August falling by 13.1% year-on-year. With the end of summer, the daily consumption of thermal coal has hit a peak and fell, but due to the weak hydropower output, the current daily consumption of thermal coal is still about 4% higher than the same period last year.
ferrous metal : off-season is not light, peak season is not strong, supply pressure shows that
crude steel production in August 2022 was 83.87 million tons, a year-on-year increase of 0.5%, the first positive growth this year, an increase of 6.9 percentage points higher than in July. The average daily crude steel production is 2.71 million tons, a rebound from 2.63 million tons in July. From January to August this year, crude steel production was 693 million tons, a year-on-year decrease of 5.7%, and annualized output was 1.041 billion tons. Pig iron production in August was 71.37 million tons, a year-on-year decrease of about 0.5%, a decrease of 3.1 percentage points from July. In August, steel exports were 6.153 million tons, a year-on-year increase of 21.8%, an increase of 4.1 percentage points from the previous month, but the absolute volume fell by 7.8% month-on-month. In August, steel imports were 893,000 tons, down 16% year-on-year and 13.2% month-on-month. Our estimate of the apparent steel consumption in August fell by about 1% year-on-year, a decrease of 7.1 percentage points from July. In terms of raw materials, iron ore imports were 96.208 million tons in August, a year-on-year decrease of 1.3%. Coke production in August recorded 39.11 million tons, a year-on-month decline of 2.5%/a 0.8% increase respectively. In terms of
supply, steel production in August rebounded compared with the previous month, and the year-on-year growth rate turned positive due to the low base in the same period last year. In July, steel mills actively shrank their output destocking , long-process steel mills returned to small profits from losses, and electric furnace profits also rebounded to near the break-even point. Steel plants have resumed production since early August, and the national blast furnace capacity utilization rate rebounded from 79.3% at the end of July to the current 88.3%, 4.7 percentage points higher than the same period last year. The capacity utilization rate of 49 arc furnaces steel mills across the country also rebounded to 40%, but profit pressure and power limit in Sichuan and Chongqing also suppressed the room for continued recovery.
In terms of domestic demand, the characteristics of demand during peak and peak seasons are not obvious. The off-season in August is not light, but after entering the traditional "Golden September" peak season, demand recovery is not as expected, and has gradually lagged behind the recovery of supply, supply pressure has emerged, inventory sales slowed down and even accumulated inventory. According to downstream demand, asphalt shipments continue to rebound, reflecting that the physical workload related to infrastructure is still being released. However, the weak fundamentals of real estate are still a constraint on the recovery of demand in the peak season. In August, the year-on-year decline in real estate development investment and newly started area continued to wider than last month, recording -13.8% and -45.7% respectively. However, from the perspective of high-frequency data, the apparent consumption of rebar in August fell by only 8.2% year-on-year. We believe that this reflects the hedging of infrastructure demand, but on the other hand, it also reflects the pressure on the supply side that may be greater than that reflected by explicit inventory data. In terms of manufacturing, the apparent demand for hot coil rebounded beyond expectations. Judging from macro data, the added value of industrial above-scale in August increased by 4.2%, among which excavator sales were the same as last year, and automobile production and sales maintained a large year-on-year growth on the low base last year. In terms of steel import and export, steel export volume in August fell slightly compared with the previous period. In August, the prices of hot coils in Europe and North America have basically stabilized at around 750 and 900 US dollars per ton. Recently, due to the impact of power shortages and weak demand, steel mills in Europe and other places have started to cut production, and prices have rebounded slightly. We expect export pressures may not increase further in the short term, but in the context of overseas rate hikes , we believe that it may be difficult to have obvious export arbitrage space.In terms of raw materials, iron ore imports continued to rebound month-on-month in August. We expect that there may still be room for seaborne iron ore supply in the second half of the year.
Nonferrous metals : News of aluminum production cuts are frequent, and expectations for downstream demand season have not yet been fulfilled
Copper: High temperature power limit affects supply and demand, and may improve in September. Due to the completion of smelter maintenance and the climb of individual production capacity, domestic refined copper production in August increased by 2% month-on-month to 857,000 tons, an increase of 4.5% year-on-year, and the cumulative output from the beginning of the year to August increased by 1% year-on-year. As the impact of high-temperature power limits in local areas subsides in September, we expect domestic refined copper production to continue to rise month-on-month. In terms of downstream demand, the copper start-up rate in August was down month-on-month due to the impact of high-temperature power limits and the epidemic in local areas. As September enters the traditional peak season and the impact of high-temperature power limits subsides, downstream demand may improve month-on-month. In terms of imports, according to the General Administration of Customs, China's import of copper concentrate in August rose 19% month-on-month to a record high of 2.27 million tons per month. The cumulative imports from the beginning of the year to August increased by 9% year-on-year. The weekly imported ore processing fee has risen to US$82/ton, and the supply of copper concentrate market is stable and loose. In August, my country's imports of unforged copper and copper materials increased by 7% month-on-month to 498,000 tons, and cumulative imports from the beginning of the year to August increased by 8% year-on-year to 3.9 million tons.
aluminum: Exports declined month-on-month, and the risk of domestic and foreign production cuts reappeared. According to the General Administration of Customs, China's unforged aluminum and aluminum exports fell by 17% month-on-month to 540,000 tons in August, still 10% higher than the same period last year, and the cumulative exports from the beginning of the year to August rose by 31% year-on-year. Domestic demand has performed flat, expectations for the peak season of "Golden September and Silver October" have not yet been fulfilled, and social inventory continues to operate smoothly. Affected by the production cut caused by drought and power shortage in Sichuan and Chongqing, the domestic production of electrolytic aluminum remained unchanged month-on-month in August, up 8% year-on-year, and the cumulative production from the beginning of the year to August increased by 2% year-on-year. In addition, production cuts at the domestic and foreign supply side have occurred frequently recently and are expanding. The report "Aluminum: Domestic and foreign power risks have reappeared. What is the difference in the impact this time? In 》, we summarized the recent impact of production cuts in Europe and Yunnan, and pointed out that the scale of production cuts at home and abroad still has a trend of expansion. In the short term, aluminum prices have momentum to rebound, and the upward space for aluminum prices depends on the actual reduction in Yunnan's hydropower aluminum production, duration, and the sustainability of demand improvement on the completion end of real estate. At the same time, the cost increase or cost collapse caused by changes in overseas energy supply risks will determine the support line below the aluminum price.
Agricultural products: The decline in US yields has led to an expansion of supply and demand gap, and the peak season is not strong, and the increase in pig prices is limited.
Corn: The US yields have been significantly reduced, and global corn inventory tightening is intensified. According to USDA's September supply and demand balance table data, affected by the reduction of US corn yield from 175.4 bushels/acre to 172.5 bushels/acre, the global corn output in 2022/23 is expected to be 1.173 billion tons, a decrease of 0.6% from the previous month's forecast, and consumption is expected to be 1.18 billion tons, a decrease of 0.39% from the previous month's forecast. Due to the significant reduction in output, the global corn inventory sales trend continued, down 0.7% month-on-month to 305 million tons. Domestic, according to the Ministry of Agriculture and Rural Affairs' 9 supply and demand balance table, the national corn production in 2022/23 is expected to be 273 million tons, imports are 18 million tons, and consumption is 291 million tons, both of which are the same as the forecast last month.
Soybeans: The yield of new US soybeans has been significantly reduced, but global inventory is still recovering year-on-year. According to USDA's September supply and demand balance table data, affected by the sharp drop in US soybean yield, the global soybean output in 2022/23 is expected to be 390 million tons, a decrease of 0.77% from the forecast for the previous month. The consumption and import and export trade volume were slightly lower than the previous month, and the inventory forecast for the end of the period was lowered by 2.46% month-on-month. In addition, according to the prediction of NOAA, the probability of La Nina from September to November has reached 91% [1], focusing on the weather conditions of the sowing season in South America, and there is still uncertainty in global soybean production. Domestic, according to data from the General Administration of Customs, my country's soybean imports in August this year were 7.166 million tons, a month-on-month decrease of 9.10%. According to August data from the Ministry of Agriculture and Rural Affairs, in 2022/23, my country's soybean production may increase significantly year-on-year to 19.48 million tons, imports are expected to increase to 95.2 million tons, and consumption is expected to increase by 3.23% year-on-year to 113 million tons.
live pigs: The upward trend of pig prices has not changed, but consumption in the peak season is lower than expected. As of August 31, the average price of three-yuan live pigs abroad was 22.5 yuan/kg, up 6.13% from the same period last month. Specifically, the ex-factory prices of foreign three yuan pigs in various places have risen to varying degrees. On August 31, the ex-factory prices of foreign three yuan pigs in Liaoning, Henan, Sichuan, Hunan and Guangdong were 22.7 yuan/kg, 23.1 yuan/kg, 24.35 yuan/kg, 23.4 yuan/kg, and 24.5 yuan/kg, respectively, up 9.4%, 8.45%, 11.44%, 12.5%, and 7.93% respectively month-on-month. Overall, the upward trend of pig prices remains unchanged in August, but the price support given by the peak consumption season before the traditional September festival is not as strong as in previous years. In addition, the repeated epidemic situation and policy regulation may put pressure on prices, so under the trend of rising prices in the peak season, the price increase may be lower than expected.
Palm Oil : Malay production increase rate has recovered, but exports are still at a historical low. According to MPOB supply and demand data, horse brown production in August was 1.7258 million tons, an increase of 9.67% from the previous month, mainly benefiting from the improvement of precipitation during the month; exports fell 1.94% from the previous month to 1.2997 million tons, and exports to China rose 1.28.93% from the previous month to 126,700 tons. We believe that although the monthly increase was obvious, this was mainly affected by the low base effect last month, and the absolute value of export volume is still at the historical low level in the same period.
Risk warning: Extreme weather, lower demand than expected, geopolitical risks. For details, please refer to " CICC Commodities | August Data Comments: Demand has not been fulfilled under the influence of the epidemic and high temperatures"
Building Materials Papermaking
Cement is affected by the high temperature and has weak demand. 8 cement sales in August were 188 million tons, down 13.1% year-on-year, an increase of 6ppt, and a decrease of 2.1% month-on-month, which is the third consecutive month-on-month decline, which is consistent with what we learned from the company. The main reason is that the impact of high temperatures and local epidemics on construction still exists, and there is still no significant improvement in the two aspects of the weak new construction of real estate and the lack of infrastructure funds. Cement demand showed marginal improvement in September, and the cement shipment situation has improved by single digits in the past two weeks. The demand for in East China and South China has recovered better, and the demand rebound in central and Southwest China has become even weaker due to lack of funds. However, the previous power limit has led to the suspension of cement production in the southwest region, and many cement companies in other areas have taken the initiative to stagger production restrictions, which has caused weak demand, but not high inventory, and prices have gradually begun to recover slightly. We expect profits in the second half of the year to be restored quarter by quarter at a lower level.
8 flat glass production increased by 0.2% year-on-year, relatively stable. demand side recently, we have seen some improvement signals. In August, the year-on-year decline in the completed area of the Bureau of Statistics narrowed significantly to single digits, with the decline converging by more than 30 percentage points. The downstream deep processing order days we tracked also improved by 20-30% compared with the middle of the year, and the seasonal improvement of demand is still relatively obvious. The shrinkage of supply is accelerating. Since June 23, due to the pressure of demand and higher costs, glass companies with cash losses have occurred. Many glass companies have begun to choose to stop production and refurbish in batches on the eve of the peak season. The proportion of cold repairs for unplanned production lines has gradually increased. By September 11, the total cold repair capacity has been close to 10,000t/d. Even if the resumption of production ignition is considered, cold repairs have driven the net reduction of the effective daily melting volume of float glass by 3-4%. In the future, we expect that production capacity will continue to enter cold repairs, demand will be upward and supply will be downward, and the price may have a second rebound. Overall, we believe that the situation in glass and cement is "has bottomed out and is looking forward to rebound."
For building materials companies, we maintain the order of new construction of infrastructure real estate demand in the second half of the year. At present, the demand side challenges may still be relatively severe in the second half of the year. The high temperature weather in August, the spread of the epidemic, coupled with the shortage of funds, the overall impact on construction is still relatively large, and the recovery of demand for real estate and infrastructure from September to October may only be a moderate recovery. The complete reversal of the market may still need to wait for the industry's supply to be further cleared and demand will be further repaired.
risk warning: demand is lower than expected, and the price of raw fuel at the cost side exceeds expectations.
Bank
in August added 2.43 trillion yuan in social financing, a year-on-year increase of 559.3 billion yuan, higher than the 2.04 trillion yuan expected by Wind. The year-on-year growth rate of social financing stock was 10.5%, down 0.2ppt from the previous month; new loans were 1.25 trillion yuan, up 39 billion yuan year-on-year, slightly lower than the 1.36 trillion yuan expected by Wind, and the loan balance was 10.9%, down 0.1ppt from the previous month.
Credit structure is improved under the guidance of "stable growth". The loan scale of html in August increased by 39 billion yuan year-on-year, mainly due to the contribution of the medium- and long-term loans of to corporate and the short-term loans of to corporate . The two increased by 2138/102.8 billion yuan year-on-year, which was significantly better than the year-on-year increase of 1478/96.9 billion yuan in July; the discount bills to increased by 122.2 billion yuan year-on-year, which was significantly reduced by 136.5 billion yuan year-on-year increase compared with July. On August 22, the People's Bank of China held a credit symposium to emphasize "increase the issuance of loans to the real economy". After that, the discount rate of bills rebounded significantly, which may indicate that the intensity of substantial credit issuance and the reduction of bills. Resident loans increased by 117.5 billion yuan year-on-year, mainly due to the weak demand for housing purchases and the large amount of early repayment of loans; residents' short-term loans increased by 42.6 billion yuan year-on-year, perhaps mainly due to the increased marketing efforts of consumer loans.
non-standard increase support for social financing. htmlIn August, new social financing increased by 559.3 billion yuan year-on-year, mainly due to the decrease in government bonds and corporate bonds by 669.3 billion yuan/350.1 billion yuan year-on-year; the decrease in government bonds was mainly due to the pre-issuance of local bonds in the first half of the year; the decrease in corporate bonds, which may be due to the relatively abundant corporate funds, and the decline in the demand for bond issuance financing, which is also related to the tight financing of municipal bonds. On the other hand, non-standard financing increased significantly, with entrusted loans/trust loans/undiscounted bank acceptance bills increasing by 157.8 billion yuan year-on-year/down 89 billion yuan year-on-year/up 335.8 billion yuan year-on-year respectively. Among them, the increase in acceptance bills of undiscounted banks increased year-on-year mainly due to the decrease in discounts on the balance sheet bills, "one has increased and the other has decreased"; the increase in entrusted loans by 175.5 billion yuan, an increase of 157.8 billion yuan year-on-year, which may be related to the increase in urban investment and financing brought about by the introduction of policy financial instruments and the increase in urban investment and financing brought about by the launch of policy-based financial instruments and the reduction in urban subsidy; the decrease in trust loans by 89 billion yuan year-on-year mainly due to the low base before the end of the new asset management regulations.
policy bank is expected to become the main force in infrastructure loans in the second half of the year. Since June, the policy has increased the credit line of 800 billion yuan and added two batches of tools totaling 600 billion yuan to supplement the capital of infrastructure projects. The first batch of tools of 300 billion yuan has been invested in August, mainly including transportation, water conservancy and energy, information technology logistics, underground pipeline corridors, high-standard farmland, national security infrastructure, etc. As the project capital is gradually in place, we expect supporting loans to continue to support the growth rate of medium- and long-term loans to the public and medium- and long-term loans to stabilize and recover. Assuming a 1:4 leverage ratio of 600 billion yuan can leverage 3 trillion yuan of infrastructure investment. Judging from the indicators such as the asphalt operation rate, infrastructure construction has accelerated since August.
Restore of real estate loans is subject to policy adjustments. html In August, the medium- and long-term loans for residents increased by 160.1 billion yuan year-on-year, a year-on-year increase of 9 consecutive months; in 2Q22, the year-on-year growth rate of real estate mortgage loans hit a record low, mainly due to weak demand for home purchases and more early repayment. The medium- and long-term LPR was reduced by 15 basis points in August. The lowest mortgage loan interest rate in most second-tier cities has dropped to the lower limit of 4.1%, but the real estate transaction area is still at a low level. However, with the strengthening of local governments' "protecting and subsidizing" measures and further relaxing of purchase restrictions, residents' demand for buying houses is expected to continue to recover. Recently, government departments have issued special loans for policy enforcement to ensure the delivery of buildings, Zhengzhou and other cities have issued plans for the full resumption of work of properties suspended. The housing transaction area in third-tier cities has recovered since late August, and the policy effect needs to be further observed in the future.
Risk: The epidemic has been repeated, the economy has been in a downturn, and risks in the real estate industry have spread.
Non-bank finance
Capital market and diversified financial industries: Domestic market transactions remain active in August, while overseas markets and index performance are under pressure. , the average daily turnover of A-shares is -24% year-on-year/+0.1% month-on-month to 1.0 trillion yuan, the average daily turnover of Hong Kong stocks is -42% year-on-year/-15% month-on-month to HK$92.4 billion, and the balance of A-shares is stable at 1.6 trillion yuan on the same month-on-month; in terms of indexes, the A-share Shanghai and Shenzhen 300 Index is -2.19%, the ChiNext Index is -3.75%, the Hang Seng Index is -1.0%, and the Hang Seng Technology Index is -1.33%.Corresponding sector views:
► Securities sector: Valuation enters the left layout range. The current valuation of securities sectors and institutional holdings are at the historical bottom, paying attention to the elasticity brought by loose policy, deepening reforms, and improving market risk appetite.
►In terms of exchanges, the beta of the Hong Kong stock market is the key influencing factor. Previously, from late May to June, the platform economy rebounded and policy dividend expectations ushered in a phased rebound; after completing a certain repair, it moved to the beta-dominated stage in the short term.
►Other diversified financial sectors, it is recommended to pay attention to high-quality leasing companies as a stable choice.
Insurance and health management industry:
►Property and Insurance sector: The process of increasing the marketization of the auto insurance industry promotes the scale advantages of large companies, and the comprehensive advantages derived from various aspects of auto insurance operations based on scale are further revealed. China's property and insurance business advantages are more stable, and the non-auto business may bring greater performance elasticity under a low base.
►Life insurance sector: The time when the liability side fell by the largest decline may have passed.
Risk warning: regulatory environment uncertainty; competition in the industry intensifies; market activity declines; market volatility risks.
Real Estate
Investment continued to weaken in August, and sales improvement still needs to be strengthened by policies and regulations
National Bureau of Statistics announced the real estate development investment and sales figures from January to August 2022.
htmlThe year-on-year decline in commercial housing sales in August narrowed slightly, and continued improvement still needs further efforts in industry policies. htmlThe year-on-year decline in the national commercial housing sales area and amount in August narrowed by 6.3ppt and 7.4ppt to -23% and -20% respectively, which is better than our market observation based on high-frequency data (August-32% vs July-29%). Considering that CICC's homogeneous second-hand residential transaction price index fell 0.9% month-on-month in August, the sales rate of key cities in the first two weeks of September was also under relatively pressure. We believe that the continued improvement in sales still depends on the full use of the policy toolbox of the real estate industry and the effective recovery of residents' expectations. The real estate market policies in some regions have been adjusted recently.
8html Real estate investment fell again in June, and the sluggish sales may be the main reason for the pressure on investment. htmlIn August, the year-on-year decline in national real estate development investment further widened to -13.8%, the lowest value before the year was -12.3% in July; the year-on-year decline in the net increase in newly started construction area and construction area continued to remain at a low level (August -46% and -48% vs July -45% and -44%), reflecting that real estate companies' investment willingness and ability are still relatively low. Looking forward, we believe that before sales are significantly restored, the cash flow pressure of real estate companies may continue to be under pressure, which restricts the recovery of their effective investment capabilities, and may need to wait for supply-side measures to take effect.
htmlIn August, the year-on-year decline in funds in real estate companies improved slightly, among which domestic loans contributed the most significantly. htmlIn August, the year-on-year decline of funds in real estate companies narrowed slightly by 4ppt to -22%, of which the year-on-year decline of domestic loans narrowed by 19ppt to -18%, the year-on-year decline of self-raised funds narrowed by 2ppt to -18%, and the year-on-year decline of deposits, prepayments and personal mortgage loans narrowed by 5ppt and 4ppt to -26% and -18%, respectively.
risk warning: policy changes or fundamental repairs are lower than expected; real estate companies' credit side deteriorates at an accelerated pace; the impact of the epidemic exceeds expectations.
Internet
Online sales maintained a recovery trend, and the penetration rate of online shopping has increased steadily and slightly
8 online retail data continued to have a slight recovery trend, mainly benefiting from the recovery of consumption brought about by the slowdown in the epidemic and the recovery of online virtual goods sales. The total online retail sales (including physical and virtual items) in August 2022 was 1.1 trillion yuan, an increase of 7.1% year-on-year, an increase of 3.3pct compared with July 2022, and the CAGR from August 2020 to August 2022 was 7%. Among them, online physical goods sales increased by 6.5% year-on-year to 926.1 billion yuan, a slight increase from 6.3% year-on-year in July 2022. The CAGR from August 2020 to August 2022 was 6%; among them, due to the impact of the Yiwu epidemic in August, the recovery speed was affected by certain interference. The growth rate of online virtual goods sales turned from negative to positive this month, up 10.6% year-on-year to 181 billion yuan, with a CAGR of 11.6% from August 2020 to August 2022.
online retail by category, in all aspects of "food, clothing and consumption", online food products performed continuously steadily, with a year-on-year increase of 23%, online wear products increased by 8% year-on-year, and online use products increased by 3% year-on-year. In terms of penetration rate, the penetration rate of online shopping in 8 (the percentage of online physical sales to total social retail sales) was 25.5%, a steady increase from 25.3% in the same period last year, and also increased month-on-month.
Recently, domestic e-commerce companies' performance in the second quarter has been disclosed. Under the influence of the epidemic, domestic e-commerce GMV was generally under pressure in the second quarter, but thanks to the company's active response, the revenue side generally meets expectations or slightly exceeds market expectations; reducing costs and increasing efficiency on the profit side has become the main theme, driving profits to exceed expectations. looks forward to the third quarter and the whole year of this year. We believe that although consumption gradually recovers, considering the epidemic and macro uncertainty, the influencing factors of consumption gradually shift from the supply side to the demand side, from performance and restricted scenarios to uncertainty in consumption capacity and willingness; we expect that the recovery of revenue side in the third quarter may be slightly lower than expected, and the profit side cost reduction and efficiency increase is expected to continue to advance. In the medium and long term, we believe that balanced cost reduction and efficiency improvement and long-term development will become important topics. Comparing
with overseas e-commerce horizontally, we believe that Chinese e-commerce relies on excellent infrastructure and powerful service experience, new models such as live e-commerce and same-city e-commerce are in full swing, and online penetration is still advancing.
Risk warning: The epidemic is repeated; the macro economy and consumption are weak; inflation brings certain uncertainty to the supply chain.
Construction
6 Infrastructure investment growth rate hit a new high in the past three years
Investment data : The demand for the construction industry improved month-on-month in August; the growth rate of infrastructure construction reached a new high in the past three years. The Bureau of Statistics disclosed the fixed investment data in August. The fixed investment in urban areas increased by 6.5% year-on-year in a single month, an increase of 3.0ppt month-on-month from 3.5% last month, implying that the demand for the construction industry improved month-on-month; among the structure, the monthly real estate indicators weakened marginally, and the monthly indicators of infrastructure and manufacturing industries strengthened marginally. Among them, in terms of infrastructure, the growth rate of broad infrastructure in a single month was 15.6% and the growth rate of narrow infrastructure in a narrow sense was 15.4%, both accelerating by about 4ppt compared with the previous month, and at the same time reached a new high in the year and the past three years. In terms of splitting the fields, the growth rate of transportation in old infrastructure in the old infrastructure increased by 7.2ppt compared with the previous month to 9.3%, and the municipal government continued to accelerate by 2.8ppt to 21.2%; the overall growth rate of new infrastructure was maintained, such as electricity and health increased by 14.4% and 26.9% year-on-year, but the growth rate of cultural investment increased by 1.2% year-on-year, slowing by 22.2ppt compared with the previous month, returning to the single-digit growth rate.
project data: 8 infrastructure bidding volume growth rate hit a new high in the past three years; the growth rate declined in early September. The bidding data trend is also consistent with the investment trend. After the year-on-year growth rate of infrastructure bidding volume turned positive in June and the growth rate in July continued to rise to 30%, the monthly growth rate in August reached a new high in the past three years (150% year-on-year growth and 117ppt month-on-month increase); by field, among which transportation and electricity mainly contributed to the monthly growth rate, with a year-on-year growth of 191% and 827% respectively, highways, photovoltaics and power grids grew rapidly, environmental protection and municipal government also maintained a relatively fast year-on-year growth rate and a month-on-month increase, with a year-on-month increase of 104% and 79% respectively, both with a month-on-month increase of 50-55ppt; by region, all regions showed a rapid growth trend year-on-year growth trend, with Southwest, Northwest and Central China respectively increasing by 268%, 227% and 204% respectively, making it the three regions with the highest growth rate. As September enters, the growth trend of infrastructure bidding has slowed down. According to data on September 11, it is estimated that the implicit year-on-year of infrastructure bidding in September was 9%, which is significantly slowed down compared with July and August. Of course, there may be some errors in the weekly data and the final monthly, and we also pay attention to the release of subsequent infrastructure projects.
Funding data: Fiscal expenditure continues to be strengthened and the funds deposited in the early stage are expected to provide support for the implementation of the project. Public fiscal expenditure increased by 10% year-on-year in July, accelerating by 4ppt month-on-month in June, reflecting the continued efforts of fiscal expenditure; government fund expenditure increased by 20% year-on-year in July, continuing to be stronger than the year-on-year decline in government fund revenue. The issuance of special bonds in August was still at a low level and slightly less than the repayment amount. The issuance of a single month was 51.6 billion yuan and the repayment amount was 55.8 billion yuan, a year-on-year decrease of 89% and a 6% increase respectively. On a month-on-month basis, the issuance and repayment amount in August both decreased compared with July, a month-on-month decrease of 16% and 63% respectively.We believe that the current capital side is still relatively sufficient, and the fiscal policy has continued to make efforts since the third quarter. At the same time, considering that the annual special bond issuance quota is basically completed in the first half of 2022, and the special bonds proposed by the State Council will be basically in use at the end of August. We believe that it is expected to provide support for the further implementation of subsequent projects and the upward growth rate of infrastructure investment. Looking forward, we believe that considering that since June, the growth rate of infrastructure bidding amount has been on the rise, and the construction process in various places has recovered as the impact of the epidemic has decreased, fiscal expenditure on the capital side continues to be strengthened, and the funds deposited in the early stage are expected to continue to be implemented in physical work. We believe that infrastructure investment is expected to maintain rapid growth in September, and as the base of the previous year rose in the fourth quarter, the growth rate of infrastructure investment may weaken.
After the stock price of infrastructure targets continued to decline in July, the sector's stock price has risen in stages since early August. We believe that the sector's fundamentals have improved after the third quarter, but considering that the current financial resources of local governments still have certain constraints, we expect that the sustainability of infrastructure fundamentals may be relatively limited, which will have certain constraints on the continued rise of stock prices. Looking ahead, we recommend paying attention to the opportunities brought by the policy of stabilizing growth to central construction enterprises.
Risk warning: infrastructure investment is implemented less than expected.
Utilities
Monthly data introduction:
National Development and Reform Commission, China Electricity Union, and the National Bureau of Statistics released monthly electricity data:
► Demand side: In August, the whole society's electricity consumption increased by 10.7% year-on-year (July: +6.3%), further strengthening month-on-month. By industry, the primary, secondary and tertiary industries increased by 14.5%, 3.6% and 15.0% year-on-year. Due to the extreme high temperature guidance of power supply demand in many places, the electricity consumption of residents has increased significantly year-on-year. From January to August, the electricity consumption of the whole society increased by 4.4% year-on-year, while the primary, secondary, tertiary and residents increased by 11.0%, 1.4%, 6.1% and 15.8% year-on-year.
► Power generation: National power generation increased by 9.9% year-on-year in August (July: +4.5%). Among them, the growth rate of thermal power and wind power increased significantly, up 14.8% and +28.2% year-on-year. The weak incoming water caused hydropower to be -11.0% year-on-year. Nuclear power was basically stable, down 0.6% year-on-year. The growth rate of photovoltaics fell slightly, up 10.9% year-on-year. From January to August, the national power generation increased by 2.5% year-on-year, hydropower, nuclear power, wind power and photovoltaic increased by 11.4%, 0.9%, 9.6% and 13.2% year-on-year, and thermal power -0.2% year-on-year.
tracks the price trend of upstream wind and light equipment:
Photovoltaic industry chain: In August, due to maintenance and power restrictions, the prices of silicon materials continued to rise, and the prices of silicon wafers, batteries and modules remained stable
► 1) Silicon materials: production was about 6.5% lower than expected, and the price continued to rise, from 297 yuan/kg at the end of July to 305 yuan/kg at the end of August, and continued to rise to 307 yuan/kg at the beginning of September. In September, maintenance will basically resume operation, and the impact of power limit will be basically eliminated. It is expected that domestic silicon material production will increase significantly by about 20%. We expect silicon material prices to peak. 2) Silicon wafers, batteries, and modules: The downstream acceptance is limited, and the prices of silicon wafer batteries and modules remained stable in August, and silicon wafers and batteries rose slightly in early and mid-September.
Wind Power Industry Chain : The winning bid price of fans in August continued to be stable month-on-month, the price of 6MW fans was basically stable at around 1,700 yuan/kilowatt, and the bidding price of fans and towers was stable at around 2,100 yuan/kilowatt. In the past 3-4 months, the price of fans has shown strong stability. From January to August this year, the open market bidding volume of the wind power industry was about 63GW (including 54GW of onshore wind power and 9GW of offshore wind power), which exceeded the total number of open market bidding volumes last year.
Power Operation: power limit problem highlights the shortage of "base load installation" in some areas. 1) The status of thermal power supply guarantee has been re-confirmed. At present, various regions have accelerated the approval pace of thermal power, and the proportion of approved projects after June reaches 65%. But at present, we believe that what is more urgent is to improve the profitability of thermal power, so as to increase the attractiveness of project investment and construction funding support, and promote investment implementation. We expect that favorable policies from multiple aspects are expected to help performance recovery (financial support, interest rate discounts, tilting new energy indicators, boosting the performance rate of coal medium and long-term contracts, canceling preferential electricity prices, etc.). 2) Nuclear power: On the evening of September 14, the State Council announced the approval of the construction of the second phase of Zhangzhou, Fujian and the first phase of Lianjiang, Guangdong. The annual approval volume rose to 10 units, exceeding our expectations and the highest level since 2008.With the continuous improvement of domestic technology and the pressure on social public opinion weakens, we believe that subsequent nuclear power approval will return to normal pace, or even exceed expectations, bringing long-term growth momentum and valuation boost. 3) New energy: The market's excessive concerns about the ultra-low bidding for sea breeze, market trading rules and subsidy recycling issues have gradually eased. Looking ahead to 4Q and next year, the release of silicon material production is expected to bring about a decline in silicon material and component prices. We believe that intensified competition in the component link is conducive to the control of scenery cost, and Green Power is expected to open up a situation of both volume and profit growth.
Power Grid Equipment: According to statistics from the National Energy Administration, the power grid project completed an investment of 223.9 billion yuan from January to July, an increase of 10.4% year-on-year. Among them, the year-on-year investment growth rate in June and July was +26.1% and +13.2%, verifying the upward prosperity of the industry. In addition, judging from the power grid bidding data, the bidding of core equipment has shown rapid growth. As of the end of August, the bidding amount of State Grid substation equipment increased by 41% year-on-year; the bidding amount of electricity meter increased by 37% year-on-year; the cumulative bidding of digital projects increased by 92% year-on-year. Development trend: 1) There may be multiple UHV DC approvals and start construction in the second half of the year, which may bring considerable revenue growth to leading core equipment companies. 2) Distributed smart grid drives the development of distribution network intelligence and microgrid business, distribution network investment has grown steadily, and the level of intelligence has continued to improve. 3) The digitalization of the power grid is an important tool to promote the transformation and upgrading of the power grid, and the future growth is considerable.
Photovoltaic manufacturing: We are optimistic that the supply of silicon materials will begin to gradually release from September, driving the industrial chain's operating rate and prosperity to accelerate the upward trend.
Wind Power Manufacturing: After the interim report, the industry reported that the wind power industry has entered an accelerated period of production, delivery and construction. The projects in the early stage are expected to enter a concentrated construction period with the improvement of grid connection procedures and supporting facilities. In the third and fourth quarters of this year, the upward trend of economic prosperity has been established. At the same time, with the rapid decline in prices of upstream bulk raw materials, especially steel products, the profitability of the upstream parts industry chain is expected to continue to improve from the end of the third quarter in the second half of the year. Looking ahead to the whole year, we expect that the domestic market will realize the installed capacity of more than 55GW (+17% year-on-year) and the bidding demand of more than 80GW (+48% year-on-year), which corresponds to stronger installed capacity demand next year, especially in the offshore wind power sector, the installed capacity in 2023 is expected to reach more than 12GW, a significant rebound from this year's 5-6GW.
Risk warning: medium- and long-term contract implementation of electric coal is weaker than expected.
Steel
Industry profits were restored, and steel supply rebounded in August
8 pig iron production in August was 71.37 million tons, a year-on-year, and crude steel production was 83.87 million tons, an increase of 0.5% year-on-year. The average daily crude steel output in August increased by 1.8% month-on-month to 2.71 million tons (the monthly output data used to calculate the daily average output is obtained by decreasing cumulative output), and supply rebounded under the background of industry profit recovery. From January to August, the cumulative production of pig iron/crude steel was 582/693 million tons, a year-on-year-on-year, with a decrease of -4.1/-5.7%. Against the background of the National Development and Reform Commission’s clear announcement that it will continue to reduce crude steel production in 2022 [2], if the growth rate of crude steel production in 2022 is assuming that the growth rate of crude steel production in 2022 is -1%, the average crude steel production level from September to December is about 82.33 million tons, the current crude steel production level has exceeded this average level, and the subsequent supply rebound space is limited.
Real estate continues to be under pressure, downstream demand recovery is slower
1) Real estate sales decline, infrastructure investment continues to make efforts. Judging from the macro data in August, the downstream economic climate of construction steel continues to be differentiated, and the overall demand level is still weak. In terms of real estate, the growth rate of sales area and sales in August increased by 6.3/+8.3ppt month-on-month, and the growth rate of newly started and construction area was -0.3/-3.5ppt month-on-month. Although the decline on the sales side narrowed month-on-month, the supply-side credit risk still made it difficult to form a positive cycle, and the real estate economy was slow to recover; in terms of infrastructure, infrastructure investment in August increased by 14.2% year-on-year in the month, up by 5.1ppt month-on-month compared with July, and infrastructure investment continued to increase. We observed that the average weekly apparent consumption of typical construction steel threads in August was 2.99 million tons, a year-on-year-on-year growth rate of +1.1ppt month-on-month. The overall level is still weak but the decline continues to narrow.
2) The manufacturing industry represented by automobiles continues to recover.htmlIn August, manufacturing investment increased by 10.6%, with a growth rate of 3.0ppt month-on-month. Specifically, benefiting from policies to encourage automobile consumption, automobile production and sales continued to rebound. The month's automobile production increased by 39.0% year-on-year, with a growth rate of 7.5ppt month-on-month; the monthly sales of excavators remained the same year-on-year, with a growth rate of -3.4ppt month-on-month. Overall, with the continued efforts of the policy of stabilizing growth, the overall prosperity of the downstream steel industry continued to recover weakly. In August, the average apparent consumption of the five major varieties was -6.1% year-on-year (vs. The average apparent consumption in July was -6.3% year-on-year). Looking forward, we believe that as the industry gradually ushers in the "Golden September and Silver October" peak season, projects that were suspended due to epidemics/weather and other factors in the early stage are expected to resume work, and demand is expected to be filled.
3) Steel exports fell in August. htmlSteel exports in August fell 7.8% month-on-month to 6.153 million tons, up 21.8% year-on-year. The main reason is the weakening of foreign demand, which is consistent with our previous judgment. Looking forward, as major overseas economies face multiple adverse factors such as inflation, currency tightening and weakening demand, overseas demand is likely to weaken in the future. In addition, we have observed that my country's steel FOB export price advantages and additional profits have declined since August. We believe that steel export demand will continue to be under pressure from September to December.
demand recovery and limited supply elasticity, and the supply demand in the industry is expected to improve in the peak season. 1) supply side, under the background of profit recovery, steel supply bottomed out and rebounded in August. Looking forward, under the background of the National Development and Reform Commission’s clear announcement that it will continue to reduce crude steel production in 2022, the subsequent supply rebound space is limited; combined with the current steel inventory has been at a historical low (the total inventory of five major types of steel products in the past week is 16.06 million tons, compared with the average of the same period in the past six years), with the cooperation of low inventory, the marginal improvement of demand in peak season may further enable terminal manufacturers to actively restock, and bring about a simultaneous upward trend between steel prices and corporate profits. We believe that the current industry is close to the end of the active destocking cycle and is expected to usher in the active restocking market in peak season. 2) On the demand side, the demand for housing purchases and related policies to "maintain housing delivery and stabilize expectations" continue to be strengthened in the near future. The demand for rushing construction at the infrastructure end is still being released. We have observed that the simultaneous infrastructure indicators such as cement/asphalt shipments continue to increase. Overall, we believe that the marginal improvement in downstream demand in the peak season is expected to continue.
profit distribution in the industrial chain is expected to return to rationality, and there is room for further repair of steel mill profits. html From August to the present, we simulated the average instant profits of rebar and hot rolling are 435/56 yuan/ton respectively, which is +294/+149 yuan/ton from the June-July average. Recently, we have observed a weakening signal of furnace material fundamentals:
1) Due to the tightening of global liquidity and the downward PMI, the cumulative production of pig iron in July except China was -7.3% year-on-year, down 0.7ppt from June. The high energy prices and the weak terminal demand are under pressure;
2) The import volume of coking coal continues to rise with the rapid growth of Russian/Mongolia coal imports;
3) The inventory of imported furnace steel mills has been depleted while port inventory has gradually accumulated;
4) The proportion of coke in pig iron costs has dropped by about 10ppt to around 40%, and the spiral ore ratio/snail coke ratio has fluctuated up since July. Although the price of furnace materials performed better than that of the finished material after September (mainly reflecting the market's concerns about the rapid rebound in domestic steel supply), we calculated that under the background of the National Development and Reform Commission's clear announcement that the national crude steel production reduction will continue to be carried out in 2022, the room for subsequent supply rebound is limited, and the fundamentals of furnace materials supply and demand have weakened. We believe that subsequent industrial chain profits are expected to be rebalanced, and there is room for further restoration of steel mill profits.
risk warning: real estate economic recovery is lower than expected; the global economy is accelerating.
Nonferrous
1. Nonferrous strategy environment
Three elements of the nonferrous industry, namely demand, supply and monetary factors, are undergoing some favorable changes. The favorable sub-variety sorting is gold, new energy metals (lithium, cobalt, rare earths, nickel), and industrial metals (aluminum, copper).
Demand: is still relatively sluggish from the top down, which is mainly due to the evolution of overseas economy in the direction of recession. In terms of domestic demand, the policy of stabilizing growth has seen marginal improvements at the infrastructure level, but real estate demand is still relatively sluggish.However, we believe that as the overseas economy gradually benefits from the gradual slowdown in monetary policy tightening and the continued advancement of the policy of stabilizing growth, and the gradual arrival of the peak season in the third and fourth quarters, demand is expected to improve marginally.
Supply: The negative impact of overseas epidemic and logistics has been gradually lifted, and the supply impact brought by the Russian-Ukrainian conflict is actually eased marginally, and the supply of widespread bulk goods is actually increasing marginally. Some production cuts, such as the recent reduction in European zinc smelting, are more caused by European power shortages, but this is not very sustainable in the context of a recession in demand.
Currency: The US CPI exceeded expectations in August. The Federal Reserve will still maintain a more hawkish attitude in the short term. At 2 a.m. on September 22, the Federal Reserve's September FOMC meeting reached a rate hike. The Federal Reserve's interest rate hike in September 75bp should be basically determined, but we believe that the pace of interest rate hikes will slow down in the subsequent November and December.
Now we are firmly optimistic about the three main lines:
The first main line is gold, which is the early cycle variety that first benefited from the marginal easing of currency.
We believe that the severity of the US recession pressure will be a necessary condition for the Fed to slow down interest rate hikes, and the easing of US inflation pressure will be a sufficient condition for the Fed to slow down interest rate hikes. Judging from some of the above major changes, this necessary condition has been strengthened and sufficient conditions are being met.
We believe that even if the data on these two logical clues may still be repeated in the future, the Fed's policy focus from "pressing inflation" to "anti-recession" is shifting, and the Fed's slowdown in interest rate hikes is the general trend. This will guide the gradual reduction of US Treasury yields, which will help the stabilization and rebound of nonferrous commodity prices at the financial level.
However, this marginal easing at the monetary level is only at the second-order guiding level, and is just a slowdown in interest rate hikes. It can enhance the price center of non-ferrous bulk commodities, but it is not enough to achieve a resonance of demand rebound and monetary easing to promote a strong rebound in all metals. The most favorable thing is gold, which has the simplest financial attributes, benefiting from the decline in real interest rates. The second main line of
is new energy metals and new materials, including lithium, cobalt nickel, rare earths, etc., benefiting from the improvement of fundamentals and the rebound in valuation;
lithium: the supply increase is limited, and the price increase range of entering the peak season
8 in August, the 6% domestic spodumene price reached US$5,010/ton, a month-on-month increase of 5.7%. The prices of industrial carbon, electric carbon and hydrogen lithium were 476,592,500 yuan/ton, a month-on-month increase of 3.7%, +3.4%, and +0.7%, respectively. The price of lithium concentrate increased more than that of lithium salt. Looking at the supply side of
, due to power restrictions and the epidemic in Qinghai, China, domestic lithium salt production in August declined a certain month-on-month period. In August, the domestic lithium carbonate production was 29,900 tons, -1.3% month-on-month, and the domestic lithium hydroxide production was 17,300 tons, -12.6% month-on-month. With the gradual customs clearance of lithium carbonate accumulated in customs in the early stage, the amount of lithium carbonate imported by China fell sharply. In July, the domestic lithium carbonate production was 9,369 tons, -67.0% month-on-month.
From the demand side, we see that the domestic terminal new energy vehicle market has a clear recovery signal. In August 2022, China's new energy vehicle passenger car sales reached 666,000 units, an increase of 107% year-on-year and 12% month-on-month. In August, Zhongyou battery material production also increased.
We believe that the improvement of downstream demand prosperity is expected to gradually spread to the upstream link, accelerating the inventory consumption of positive electrode material factories and the procurement demand for upstream lithium salts. Considering that the power limit on the supply side of Sichuan has ended, the epidemic in Qinghai still affects the transportation of lithium carbonate in the salt lake, and the supply increase is relatively limited, which is expected to drive the lithium price to continue a steady upward trend.
Cobalt: Cobalt prices at home and abroad have stabilized and rebounded, cobalt salt smelting profits have gradually turned losses into profits, and the turning point of profit has reached
Recently, the cobalt prices have stabilized and rebounded. Overseas MB cobalt prices and domestic cobalt metal prices have increased by 7%, 10% from the August low point to US$25.2/pound and 345,000/ton. Overseas, the rise in MB cobalt prices is mainly due to the end of overseas summer breaks, transactions are gradually active, and demand is improving. Domestic, the rise in cobalt prices was mainly boosted by previous expectations of collection and reserves.
MB cobalt price has fallen by 20% since the beginning of July, with tetracobalt salt falling by 12%-14%, and metal cobalt has only fallen by 8%. Since the beginning of September, MB prices have risen by 1.8%, but cobalt salt has risen by 4-5%. We estimate that the average profit and loss per ton of tetracobalt and cobalt sulfate smelting in 2Q22 is about -45,000 yuan, or -93,000 yuan. Currently, the average profit and loss per ton of tetracobalt and cobalt sulfate is about +30,000 yuan, or -10,000 yuan. The smelting of tetracobalt is the first to achieve profitability, and cobalt sulfate is gradually on the verge of breakeven. We believe that the bottom of the 2Q profit of cobalt salt plants is basically confirmed, and its profitability is expected to gradually increase in the second half of the year, and the turning point of industrial investment is approaching.
Rare Earth: Rare Earth indicator boots landed, waiting for the traditional peak season for magnetic materials to arrive.
htmlIn 58, rare earth prices continued to decline. In August, the price of praseodymium-neodymium oxide was 630,000 yuan/ton, a decrease of 22% month-on-month; the price of dysprosium-oxide was 2.19 million yuan/ton, a decrease of 6% month-on-month; the price of terbium oxide was 13 million yuan/ton, a decrease of 6% month-on-month. On the supply side of, the production of praseodymium oxide, dysprosium oxide and terbium oxide in August was 5,000, 165 and 29 tons, respectively, month-on-month, -4.12%, -2.94%, and -6.45%. The output continued to decline slowly, and the overall oxide production was relatively stable. The annual indicators have been announced, and the increase in indicators is accelerated in accordance with demand, with a year-on-year increase of 25%, with a growth rate of +5ppt compared with the same period last year, but it still takes time to increase production significantly. On the demand side of
, domestic automobile production in August was 2.395 million, a slight decrease of 2.44% month-on-month; the production of new energy vehicles was 691,000, a 11.99% month-on-month increase, and overall demand in August was still weak.
replenishment sentiment, due to weak terminal orders, weak demand, and relatively sensitive market, resulting in the overall industrial chain being relatively cautious in procurement, and the fear of highs continues to increase. While large NdFeB factories mainly use long-term contract orders, and the spot purchasing power for the market has declined, while small NdFeB factories lock in orders to replenish goods, with limited demand, insufficient order sustainment, and insufficient overall market liquidity.
We expect that due to the supply of raw ore, rare earth oxide production will remain basically stable in the fourth quarter. With the arrival of the traditional peak season for magnetic materials, demand is expected to drive the growth of demand for magnetic materials and rare earths, and rare earth prices are expected to usher in an upward turning point.
Third, industrial metals, especially strong supply constraints, demand benefits from the recovery of macro demand and the new energy track, which are aluminum, copper, zinc, tin, etc.
aluminum: Yunnan's electricity continues to be tight, and the expectation of supply disturbances is enhanced. The supply end of
is supplying domestically. According to statistics from Aladdin and SMMIAI, as of early September, the domestic electrolytic aluminum operating capacity was about 40.828 million tons, and the domestic electrolytic aluminum effective construction capacity was 44.661 million tons, with an operating rate of about 91.4%; as of September 9, the electrolytic aluminum operating capacity was 40.548 million tons, an increase of 85,000 tons on the weekly basis. In August, China's electrolytic aluminum production was 3.488 million tons, an increase of 8.16% year-on-year.
's short-term supply side focus is on the gradual expansion of production restrictions caused by power shortage in Yunnan. According to Huaneng Electric Power, the Lancang River Basin was 50% lower than in previous years in August. 80% of the electricity in Yunnan came from hydropower, and the current electrolytic aluminum production capacity was about 5.2 million tons/year, accounting for 13% of the domestic production capacity; according to Aladdin's survey, some electrolytic aluminum companies in Yunnan have generally reduced production by 20%. We believe that the low incoming water indicates that there are hidden dangers in current hydropower. Short-term production cuts have a great disturbance to the supply side, and at the same time delays Yunnan's subsequent new capacity and transfer capacity; at the same time, if the power is further tightened, the possibility of continuing to shut down remains.
Overseas energy tensions are intensifying, and the scope of production cuts in Europe has further expanded. Starting from August, European electricity prices rose to record levels and energy continued to be tight. On September 6, France, the largest aluminum smelter in Europe, France, announced a 20% reduction in production, involving a production capacity of 58,000 tons/year. The cumulative production capacity of electrolytic aluminum in Europe and North America has reached 1.58 million tons/year, accounting for 2.4% of the global production capacity.
demand end, According to SMM, the operating rates of China's aluminum profiles, aluminum cables, aluminum plates and foils in August were -16.47ppt, +3.48ppt, -4.46ppt, -5.03ppt, and -0.53ppt, +3.70ppt, -2.75ppt, -1.55ppt, month-on-month. Except for the demand for aluminum cables, demand for other products is still in a downturn.
In the short term, considers the supply side to shrink, the domestic policy of stabilizing growth is expected to be gradually realized, and the demand for electrolytic aluminum is expected to usher in a reversal. The current aluminum sector has good allocation value.
Copper: Demand is still relatively weak and supply pressure remains, mainly benefiting from the improvement of financial attributes
As of August 31, the price of LME copper closed at US$7791/ton, a month-on-month decrease of 2%, and the price of SHFE copper closed at RMB 62370/ton, a month-on-month increase of 5%. LME inventory fell to 119,000 tons, a month-on-month decrease of 9%, while Shanghai Futures Stock Exchange inventory fell by 35,000 tons, a month-on-month decrease of 6%. Social inventory was 105,000 tons, a month-on-month decrease of 38%.
supply: In early September, TC/RC had reached US$80.8/ton, with a monthly +10%, and the supply of copper concentrate remains relatively relaxed. In August, SMM China's electrolytic copper production was 856,500 tons, up 1.97% month-on-month and 4.54% year-on-year. The month-on-month recovery of domestic electrolytic copper production in August mainly comes from the impact of some smelters getting out of maintenance and the expansion of production capacity of Fuye Headquarters. Judging from the production schedule of smelters in September, we believe that the impact of domestic high-temperature power limit on domestic smelters has been eliminated, and the maintenance concentration is not high. The output of some southern refineries that have continued maintenance is expected to return to normal. In addition, Fuyes' expansion capacity continues to climb production, and domestic electrolytic copper production is expected to increase month-on-month in September.
demand: The production and sales of new energy vehicles doubled year-on-year in August, local infrastructure investment accelerated, and the infrastructure prosperity continued; photovoltaic installed capacity has significantly increased, driving the steady growth of cable demand, and copper demand is slightly neutral. According to SMM survey, the impact of high-temperature power limit in many southern provinces has basically subsided, and the cable industry in Sichuan and Chongqing has resumed normal operation.
In the short term, the US CPI exceeded expectations in August, the recession has not yet arrived, and copper prices will be suppressed in the short term. We believe that domestic demand expectations will improve in the second half of the year, stable domestic growth is still expected and the supply and demand side is tight, and copper prices are expected to rebound in the medium and long term.
risk warning: metal prices fell beyond expectations; production and sales of new energy vehicles were lower than expected; the Federal Reserve raised interest rates more than expected
Chemical
Affected by fluctuations in international crude oil prices and weak downstream demand in the traditional off-season, the PPI of chemical raw materials and chemical products manufacturing, chemical fiber manufacturing, rubber and plastic products industries in August decreased by 3.7%, 2.1% and 1.0% month-on-month respectively. Recently, due to the improvement of seasonal demand, the chemical product price index in September has risen month-on-month. Currently, China's chemical product price index has risen by 4.7% compared with the same period in August, at the quantile of 66% since 2012. We believe that the worst stage of midstream chemicals profits may have gradually passed, but the cost of raw materials is still at a high level and the demand pressure in related fields such as real estate has caused the profits of most midstream chemicals to be at a low level. The subsequent chemical export side may gradually face pressure, so the recovery of profits still depends on the improvement of domestic demand.
supply side contraction drives TDI prices to rise, and we continue to be optimistic about the TDI prosperity. html Since August, Covestro's 300,000 tons/year TDI device in Germany has been suspended due to chlorine leakage. Since Covestro's Texas TDI device production capacity accounts for 8.6% of the world's global production capacity, its shutdown has led to further tightening of global TDI supply, driving up TDI prices. Currently, the TDI market price in East China in China is 19,350 yuan/ton, up 26.5% from the price in early August. We continue to be optimistic about the TDI prosperity, mainly based on: 1) According to Covestro's statement, its German TDI devices are expected to be fully restored by the end of November, and the suspension of domestic and overseas devices will lead to continued tight TDI supply. 2) The rise in European natural gas prices has led to a significant increase in its TDI costs, which is beneficial to domestic TDI exports. At the same time, Germany's natural gas supply is facing challenges. We expect that the operation of devices including MDI and TDI will continue to be tested, so we continue to be optimistic about the TDI prosperity. At the same time, investors are advised to pay attention to the impact of the operation of vitamins, methionine and other devices on prices under the pressure of European natural gas supply.
Risk: Macroeconomic downward risks, chemical exports decline, and domestic demand for traditional chemicals is lower than expected. Under the rotation of base rotation of construction machinery, the overall sales of excavators in August remained unchanged year-on-year, with overseas growth maintaining a relatively high growth rate. In August 2022, my country's excavator sales were 18,100 units, the same as the same period last year; of which the domestic sales were 9,100 units, a year-on-year decrease of 26.3%, a decrease of 1.4ppt month-on-month; the export sales of excavator were 9,000 units, a year-on-year increase of 56.7%, and the growth rate decreased by 16.1ppt month-on-month.Judging from the
extension model, the year-on-year decline in sales of large/medium/small digging in August was 32.6%/47.8%/12.8%, respectively. The decline in large digging narrowed, and the decline in small digging was stable, while the decline in medium digging still maintained a large decline, reflecting that real estate still has dragged down.
In terms of the number of utilization hours, Komatsu's utilization hours in August 2022 were 98.6 hours, a year-on-year decrease of 7.0%, a decrease of 1.2ppt month-on-month and a decrease of 0.9 hours month-on-month. The actual downstream start-up power is still insufficient. In August, the new social financing increased by 559.3 billion yuan year-on-year, and the demand for physical financing has not improved.
In the short term, we expect the marginal improvement trend of industry demand in 3Q22 to remain unchanged, but there is no sign of ease in the pressure on real estate. Inadequate funds make it difficult to see a significant improvement in the start of construction in the short term. If the industry wants to continue to rise, it still depends on the interpretation of key variables such as real estate; in the medium term, we expect internationalization and electrification to open up the industry's growth space in the future. In terms of general equipment, from the perspective of PMI trend, the PMI of the manufacturing industry in mid-August was 49.4, up 0.4ppt month-on-month, the index rebounded slightly, and was still below the boom-to-bust line, and the supply and demand ends were weak. In August, metal cutting machine tools decreased by 8.98% year-on-year, and cumulative decline of 4.5% from January to August; in August, industrial robot production increased by 25.7% year-on-year, and cumulative increase of 16% from January to August.
According to micro-enterprise data, in August, the revenue of Delta Electric, an industrial automation company, increased by 35.7% year-on-year, while the previous value was an increase of 29.4%. Its new energy business contributed a large structural contribution to revenue, but Yadeke's revenue fell by 12.0% year-on-year, while the previous value was a decrease of 12.2%, and the growth momentum continued to decline.
combined with factors such as credit, representative product output, and representative company revenue, the current macroeconomic prosperity is limited, weak real estate, and slow consumption recovery have put a certain suppression on the overall demand of the manufacturing industry. Looking forward, we expect the industry's prosperity to rise steadily in the third quarter, and the specific rebound range still needs to be observed.
lithium battery equipment
According to the China Association of Automobile Manufacturers, my country's new energy vehicle sales in August 2022 were 666,000, a year-on-year increase of 107.5%; according to the China Automobile Power Battery Industry Innovation Alliance, my country's installed power battery capacity was 27.8GWh, a year-on-year increase of 121.0%. The high prosperity of downstream applications of
has driven battery factories to maintain rapid expansion of production. Since the second half of last year, we have seen overseas battery production capacity expand at an accelerated pace, and European battery factories represented by Northvolt and ACC have accelerated their expansion. In the first half of this year, Volkswagen completed the bid for 20GWh equipment. At the same time, as domestic battery factories go overseas, we expect overseas equipment bidding demand to double this and next two years.
In 2022, domestic second-tier battery factories have entered the stage of accelerated production expansion, especially in the front and rear links, and the lamination machine has also partially increased external procurement. With the accelerated expansion of production by second-tier manufacturers, we expect that on the one hand, the annual order scale of equipment factories will be higher than expected at the beginning of the year, and on the other hand, the order customer structure will be diversified, which will relatively help improve profitability.
With the expected slowdown in order growth, optimization of human efficiency management, and the increase in the scale of single-class equipment, we expect equipment factories to be in the profit improvement channel from 2H22.
Photovoltaic equipment
Silicon wafers and battery cells continue to be strong in the near future. In mid-September, the prices of silicon wafers of 166mm/182mm/210mm were 6.26/7.52/9.91 yuan per piece, which was basically the same as in mid-August. The price of battery cells increased slightly compared with mid-August. In mid-September, the price of single crystal PERC cells of three sizes was 1.29-1.30 yuan/W (about 1.28-1.29 yuan/W in mid-August).
large and thin N-type advanced silicon wafers are in short supply. The price of silicon wafers of Zhonghuan Co., Ltd. continued to increase on September 8. The price of N-type 210/182/166 model (150um) was 10.66/8.23/6.84 yuan/piece, up 0.24/0.16/0.13 yuan/piece from July 21st; the price of N-type 210/182/166 model (130um) was 10.24/7.97/6.62 yuan/piece from July 21st, up 0.24/0.16/0.13 yuan/piece from July 21st. We believe that in the context of the shortage of supply of large-sized and thin-filled N-type silicon wafers + rapid technology changes, the head silicon wafer equipment factories and slice foundries are expected to benefit fully.
new battery technology continues to reduce costs and increase efficiency, and equipment demand continues to be strong. HJT is now in a critical period of cost reduction and efficiency improvement. We estimate that the cost of HJT components is expected to be lower than PERC in 2023. If the microcrystalline + thin silicon wafer + silver solution is progressing smoothly, there is still a lot of room for component costs to decline. We estimate from the bottom up that the HJT equipment bidding is expected to reach about 25GW in 2022.At the same time, TOPCon is also making rapid efforts to improve efficiency and reduce costs. At present, driven by economy, we expect TOPCon to achieve equipment bidding of about 100/150GW in 2022/23.
Risk warning: downstream industry demand is lower than expected, domestic and foreign epidemics are repeated, and the competitive landscape is deteriorating.
Automobile
According to data from the China Association of Automobile Manufacturers, automobile production and sales in August reached 2.395 million and 2.383 million respectively, a decrease of 2.4% and 1.5% month-on-month, and a year-on-year increase of 38.3% and 32.1% respectively. Passenger car sales were 2.125 million units, a decrease of 2.3% month-on-month and a year-on-year increase of 36.5%. Commercial vehicles sold 258,000 units, a month-on-month increase of 5% and a year-on-year increase of 4%. The production and sales of new energy vehicles hit a new record high, with 691,000 and 666,000 respectively, with production and sales increasing by 1.2 times and 1 times year-on-year respectively.
From January to August 2022, the total sales of automobiles were 16.86 million, an increase of 1.7% year-on-year. Among them, the cumulative sales of passenger cars increased by 11.7% year-on-year, and the cumulative sales of commercial vehicles decreased by 36.2% year-on-year.
The domestic passenger car market gradually entered the peak season in August, and the power limit in Sichuan and Chongqing caused short-term disturbances to the production side. In terms of retail, due to the low domestic retail base last year and the gradual effect of the purchase tax halving policy, retail in August continued to continue its historical highest level, maintaining high growth year-on-year and slightly increasing month-on-month. In August, wholesale and production both achieved high year-on-year growth and a slight decline from the previous month. The main reason is that the high temperature weather in the southwest region caused power restrictions for several days and some enterprises in the automobile industry chain failed to produce in an orderly manner. Looking ahead, as terminal demand gradually enters the peak season, coupled with the easing of chip shortage and the tail effect of stimulus policies, we have optimistic expectations for 3Q/4Q wholesale sales. It is expected that in September, wholesale is expected to maintain a year-on-year growth rate of 20+% on the basis of last year's low base.
export sales hit a record high, and the willingness of car companies and channels to add warehouses has risen. In August, exports (including complete vehicles and CKD) were 252,000 vehicles, up 77.5%/+12% year-on-month, of which new energy vehicles/independent brands/joint ventures and luxury brands accounted for 30.6%/71.4%/28.6%; the total export volume hit a record high, which we believe is mainly due to the accelerated overseas layout of domestic car companies and the recovery of Tesla's production capacity.
new energy vehicles continue to have a high prosperity, and their brand performance has differentiated. In August, the wholesale sales of new energy vehicles were 632,000, up 12.0% month-on-month and 103.9% year-on-year; the wholesale penetration rate of new energy vehicles reached 30.1%, up 9.7ppt year-on-year. By type, the wholesale sales of EV/plug-in hybrid vehicles were 490/142,000 vehicles, up 92.0%/159.2% year-on-year. We believe that second-tier brands are seizing the rapid growth of economical electric vehicle segments. In the future, with the launch of products in various price segments and the continued penetration of plug-in hybrid models, new energy vehicles are expected to continue their high prosperity.
reviews the stock price trends of new forces since 2022. We see internal and external disturbances such as the Federal Reserve's interest rate hike, supply-side shocks, insufficient confidence in automobile consumption demand, and intensified market competition are the main concerns of the market. At present, the valuations of the three new forces have reached their low points since their listing. We expect the pessimism to be fully released. We reiterate that in the context of the withdrawal of fuel vehicle stimulus policies, the improvement of new energy product strength and deepening consumer awareness are expected to help new energy sales maintain rapid growth. In the medium and long term, companies that refer to the history of smartphone development, which combine innovation and manufacturing capabilities are expected to continue to lead the industry. The three new forces are in the development stage of further expansion of scale "from 1 to 10", and are also a period of charging from monthly sales of 10,000 to 30,000 vehicles. The cycle of model rotation brings a window of adjustment.
Risk warning: car consumption stimulus policy is less than expected, and demand rebounded lower than expected after the epidemic eased.
consumer electronics
mobile phone market experienced a double-digit decline in shipments in the first half of this year. After entering the second half of the year, the market expects to enter the peak season of consumer electronics and may usher in marginal improvement, including last week Apple also released new products such as iPhone 14. We will make the following brief analysis on the data and outlook of the overall mobile phone market. From the perspective of shipment volume of
, the domestic market shipment volume continues to be under pressure. On September 14, the Institute of Information and Communications Technology released the data on mobile phone shipments in July. The domestic market shipments of mobile phones were 19.91 million units, a year-on-year decrease of 31%; the shipments from January to July were 156 million units, a year-on-year decrease of 23%. Therefore, the market is still under great pressure as a whole [3]. Overseas, considering the impact of factors such as overseas macroeconomic downturn and inflation, we expect that the third quarter will still be in a continuous process of inventory destocking.But we judge that after entering the peak season of consumer electronics, the demand side may recover, and the fourth quarter may bring about month-on-month improvement. In terms of key brands of
, on September 8, Apple held its first autumn new product launch conference this year, and released the iPhone 14 and 14 Pro series, Apple Watch 8/SE/Ultra three new products and AirPods Pro 2. The product also has many highlights and innovations. The iPhone 14 series upgraded the Mini version of the small screen phone to a Plus large screen, the rear camera is equipped with anti-shake technology, and the front camera can be automatically focused. The iPhone 14 Pro series display screen has been upgraded to a hole-punch screen design, and the UI design and interactive innovation of "Lingdong Island" exceeded market expectations. In terms of pricing, the market previously expected that Apple's new products may rise across the board due to inflation and raw material price pressure, but the entire iPhone 14 series continues to be priced in the previous generation, and the pricing strategy exceeds market expectations. We believe that it is expected to drive the continued growth of mobile phone shipments.
Risk warning : The epidemic recovery is less than expected, Sino-US trade frictions intensify, and individual stock performance does not meet expectations.
Computer
1-August software industry high-frequency data analysis
Judging from the growth of the software industry revenue and total profits from the Ministry of Industry and Information Technology from January to July, the industry's revenue growth in the first half of this year was relatively stable overall. Even in March to May, the industry's revenue growth rate did not significantly decline. However, in contrast, the total profit indicator showed a continuous improvement stage from January to July. We believe that behind this is the high cardinality, seasonality, and moderate staff optimization.
, from the monitoring of key apps, as of the end of August, according to QuestMobile data, the mobile monthly and daily active users of Kingsoft WPS Office are generally stable. With the end of the summer vacation, daily active users have gradually increased and surpassed the peak in June. The daily active data of iFLYTEK input method has steadily increased from June to August, up about 11% from the end of August compared with the end of June.
We have sorted out the order data of the medical information industry. Judging from the performance of large orders, according to our statistics, the leading companies had a total of 84 orders of more than 10 million yuan from January to August 2022, including 32, 25, and 27 in 1Q22, 2Q22, and August. They were greatly affected in the second quarter and recovered rapidly in August.
In the monthly data interpretation of July 2022, we believe that the current market sentiment around strong sectors such as intelligent driving, new energy, and service robots is difficult to sustain. We recommend that you pay attention to companies whose impact in the 2Q22 epidemic is limited and enters the performance improvement cycle. In early August, we focused on recommending general domesticization, which not only includes the localization of basic software in the narrow sense of government and key industries, but also includes the localization of more generalized industry application software. It can be seen that in recent weeks, the overall market style has shown a high and low switching between tracks, and the pan-domestic field has the highest growth rate against the market. In terms of future market outlook, we continue to be optimistic about pan-domestic production. We believe that the certainty of the long-term trend of domestic production is continuing to strengthen. From the perspective of short-term performance, after the bottom of the first to second quarters of this year, the overall sector performance will also enter a period of improvement for several consecutive quarters.
Risk warning: epidemics are repeated; policy implementation speed is lower than expected; fiscal pressure increases.
Transportation
Express: National Post Bureau data shows that from September 10 to 12, during this year's Mid-Autumn Festival holiday, a total of 852 million express parcels were collected nationwide, an increase of 0.24% year-on-year, and the average daily collection volume increased by 24.8% compared with the 2020 Mid-Autumn Festival and National Day holiday; 931 million express parcels were delivered, an increase of 0.11% year-on-year, and the average daily delivery volume increased by 37.9% compared with the 2020 Mid-Autumn Festival and National Day holiday. We recommend continuing to pay attention to the recovery of business volume in the second half of the year.
Highway: 8 road freight is still suppressed by the epidemic. According to G7 data, the national freight flow data in August fell by 20.8% year-on-year and 2.0% month-on-month. According to major provinces and cities, Beijing fell by 22.0% year-on-year and 2.1% month-on-month; Shanghai fell by 26.4% year-on-year and 3.6% month-on-month; Guangdong Province fell by 17.9% year-on-year and 1.7% month-on-month. Sichuan Province, which was more severely affected by the epidemic, fell by 20.8% year-on-year and 6.4% month-on-month. In terms of freight rates, the China highway logistics freight index in August fell by 0.16% month-on-month and 3.0% year-on-year. The weak market demand and the impact of the epidemic have caused the demand for the road transportation market to narrow this month, and the freight rate level has fallen slightly.
is distributed in the same city: 8 is distributed in the same city, and the monthly active users on the demand side have increased month-on-month, with monthly active users on the supply side showing positive growth on the same month-on-month, while monthly active users on the non-meal distribution side have increased month-on-month, and monthly active users on the supply side of the capacity have increased year-on-year. In terms of retail in the same city, the monthly active users of each platform were polarized, and the monthly active users of each platform showed positive growth year-on-year and month-on-month. In terms of cargo matching, the driver's monthly active users on the main freight platform of vehicle end increased year-on-year, with each platform simply increasing by 15% year-on-year, and the ring rate was basically the same as last month. The monthly active users on the main goods side also showed an upward trend month-on-month and year-on-year. Each platform simply increased by 30% year-on-year and 4% month-on-month. The monthly active users in the same city showed differentiation year-on-year, with the monthly active users increasing by a small rate of major freight platforms. The total number of platforms increased by 3% year-on-year, and the ring rate remained the same as last month. The overall monthly active users of major market owners increased, with each platform simply increasing by 14% year-on-year and 5% month-on-month.
Cross-border Logistics: In terms of air freight, the overall freight rate in August fell slightly month-on-month. TAC Shanghai Pudong export air freight index rose 7% year-on-year and 6% month-on-month. China-Hong Kong export air freight index rose 6% year-on-year and 2% month-on-month. As air freight capacity supply gradually rebounded to pre-epidemic, global freight rates gradually switched from capacity supply to trade demand-driven. According to Clive data, global air freight capacity in August still had a 9% gap compared with the same period in 2019. In terms of transportation volume, the current cargo flights and cargo volume at Shanghai Pudong Airport have basically returned to the normal level before this round of epidemic. In terms of shipping, freight forwarding prices continued to fall, with the Baltic freight index falling by 41% year-on-year and 8% month-on-month.
Aviation Airport: Judging from the total operating performance of the five major listed airlines, the domestic passenger turnover in August increased by 59% year-on-year, mainly due to the low base caused by the influence of domestic travel by the Delta variant in the same period last year, but it fell by 4% month-on-month, recovering to 66% in the same period of 2019 (5 percentage points lower than July). We believe that the epidemic occurred in many domestic tourist cities in the second half of the summer transportation; from the situation in September, the industry's operations are still relatively weak, and the average daily passenger transport volume of civil aviation during the Mid-Autumn Festival holiday was 430,000, a year-on-year decrease of 64%.
Shipping: Foreign trade integrated transportation: Freight rates on the US and the European routes have both declined. We need to pay attention to changes in the demand side of Europe and the United States after the monetary policy is gradually tightened. Domestic trade and transportation: The growth rate of transportation capacity slowed down, freight prices fell slightly month-on-month in August, and maintained at a high year-on-year high. Dry bulk cargo: The BDI index has continued to decline since August, among which the BCI index of the large ships has fallen significantly. From August 12 to September 9, the BDI index has closed below 1,500 points for many consecutive days. At present, the international market is subject to wait and see. Oil Transportation: The freight rates of crude oil tankers in August were stable, with the freight rates of large ships rising significantly; in addition, the freight rates of finished tankers fell. We need to pay attention to the rise in freight rates of small and medium-sized crude oil tankers and refined oil since the conflict between Russia and Ukraine. Since the recent decline in international crude oil futures, we need to pay attention to the potential recovery of large-ship transportation demand.
port : In August, the container throughput of the eight major coastal container hub ports increased by 3.3% year-on-year. Among them, foreign trade increased by 0.1%. We believe that after the epidemic is gradually under control, domestic manufacturing imports and exports have stabilized overall; domestic trade increased by 13.4% year-on-year, accelerating by 6.3 percentage points from July. We believe that domestic demand has stronger resilience, and after the recovery of foreign trade, the port will have more surplus production capacity to invest in domestic trade services.
We recommend focusing on four categories of opportunities under the background of post-epidemic repair, global supply chain, and unified market: 1) opportunities for post-epidemic repair and supply and demand improvement in the aviation airport sector; 2) opportunities for improvement in the express delivery sector structure; 3) opportunities for leading companies segmenting the logistics track; 4) opportunities for individual stocks in the defense sector.
Risk warning: The scope, degree and duration of the repeated impact of the epidemic exceeded expectations; economic growth was lower than expected; a sharp rise in oil prices led to higher costs.
Medical
Medical insurance cost control is eased, and we pay attention to the oversold sector of . Since August, the Medical Insurance Bureau has issued a number of detailed rules on centralized procurement and charging policies, with the rules better than expected, including adjustments to the medical service charges for oral dental implants, coronary stent renewal rules, etc.In the document responding to the National People's Congress' recommendation No. 4955, the National Health Insurance Administration also proposed that the centralized procurement of innovative devices may be suspended. Even if centralized procurement is required, a certain market will be left outside centralized volume-based procurement to provide space for innovative products to open up the market. In combination with the DRG exclusion payment plan of the Beijing Medical Insurance Bureau since this year and the Shanghai Medical Insurance Bureau incorporating TAVR consumables into medical insurance, we believe that the Medical Insurance Bureau’s support for innovative medical products is becoming increasingly obvious.
's performance in the first half of the year has been affected to varying degrees by the epidemic, and the disturbances in the second half of the year are still to be seen. 8 is a period of intensive interim reports. From the review of interim reports, it can be seen that in the first half of 2022, pharmaceutical companies were generally affected to varying degrees by the epidemic, and their performance was relatively weak, especially the drugs and devices used in the hospital. Since July and August, epidemics have occurred in many places across the country, and local governments have taken different levels of epidemic prevention and control measures. We expect that the epidemic may still cause some disturbance to the increase in the number of hospital-side products in the third quarter, but with the increase in the demand for channel replenishment and the gradual recovery of the number of surgery, we look forward to the recovery and rebound of the company's business in the fourth quarter. The
CXO sector is affected by external events in the short term and is worried about the supply and demand relationship, and is waiting for the catalytic factors. CXO sector is still limited by 1) The impact of external events has brought more concerns about the reduction of long-term potential overseas orders in the future; 2) The market still has doubts about the supply and demand relationship of the CXO industry production capacity next year and the following year, and the short-term valuation is still suppressed to a certain extent. We believe that the sector's reversal still needs to further confirm order demand and production expansion expectations next year.
Risk warning: new product research and development failed, competitive landscape deteriorated, centralized procurement price reduction, and raw material prices increased.
Media
Digital Media: Summer time period has rich supply of high-quality content and the number of users has developed steadily. Driven by the high-quality summer content, the number of users of each video platform maintained a steady month-on-month growth. According to QuestMobile, the MAU of iQiyi/Tencent Video/Mango TV/Youku in August 2022 was 480/422/285/256 million people, a month-on-month increase of 5.9%/0.9%/3.6%/1.6%. According to Guduo data, in terms of dramas, iQiyi's "The Legend of the Condor Heroes", Youku's "Agarwood is like shavings, Agarwood is heavy in flowers", "Ice Rain and Fire", Tencent Video "Stars and Hans are brilliant, and the Moon rises to the Sea" leads the popularity of summer dramas; in terms of variety shows, Mango TV's N-generation variety show maintained steady performance, "Break the Thorns 2" ranked first in the entire network, and "Chinese Restaurant 6", "Flowers and Boys 4", "Escape Room 4" also ranked top 5. We recommend paying attention to the content capacity building and high-quality content reserves of each platform, as well as the growth of user scale driven by high-quality content.
Social Community: User traffic performed better in the summer, and the industry continued to reduce costs and increase efficiency. For users of
, according to QuestMobile data, the overall user traffic of social community platforms continued to rise month-on-month in August. Among them, the short video platforms Douyin (MAU + 2.1%/DAU + 2.0% month-on-month), Douyin Speed Edition (MAU + 1.6%/DAU + 4.9% month-on-month), Kuaishou (MAU + 4.0%/DAU + 2.9% month-on-month), and Kuaishou Speed Edition (MAU + 5.4%/DAU + 2.6% month-on-month), and the user traffic continues to improve. In terms of the platform, the second quarter results of were released one after another. The revenue-side live broadcast business and advertising business were affected by the epidemic and supervision, and their performance was generally under pressure. The e-commerce business has made relatively good recovery due to the resumption of work and production and mid-year promotions; in terms of profit, under the background of great pressure on the external environment, most companies are ROI-oriented, pursue high-quality growth, and promote cost reduction and efficiency improvement. Overall, we believe that the performance in the second quarter is a stress test, and the business in the third quarter is still in recovery, but with the further improvement of the macro environment, the company's development focus may still return to the growth track.
Online Games: The game market is stable in August, and the version number is issued in an orderly manner.
According to Qimai data, in August 2022, the spending of mobile game APP on the iOS side (only iPhone) was basically the same and month-on-month, down 0.3% and 0.1% respectively. In terms of manufacturers, according to SensorTower, was shortlisted for the top 100 mobile game publishers in August (1 manufacturer increased month-on-month), with a total revenue of more than US$2 billion (basically flat on the month-on-month), accounting for nearly 38.1% of the top 100 (the proportion was flat on the month-on-month).In terms of products, the top three html app store mobile game revenue in 78 China are "Glory of Kings", "Peace Elite" and "Diablo: Immortal", among which "Diablo: Immortal" has increased by 9 places compared with last month; at the same time, AISNO Games has been added to the top 20 places. In terms of download list, the top three iOS downloads in August are "Subway Parkour" (Chuangmengtiandi-Ledo Game), "Shebo Team" (Haibi Game) and "Organic Vegetable Market". In terms of version number, on September 13, the State Administration of Press and Publication issued a total of 73 version numbers this year, including NetEase's "All-Star Street Ball Party", Tencent Interactive Entertainment's social value exploration "Health Defense War", Xindong Company's "Simulation Jianghu" (Tap Exclusive, Hanjia Squirrel Development, Client)/"Four Seasons Spring" (Tap Exclusive, MzStudio Development), and the Chinese mobile game "Soul Town Street: Born as King", etc. We believe that the top stock products performed steadily in August, and new games drove the game market to be active; the pace of distribution of version numbers was orderly, and the positive signals on the supply side of the game sector continued. It is recommended to pay attention to the overall recovery rhythm of the industry.
Marketing Advertising: The year-on-year decline in the advertising market from July to August may continue to narrow, but it is still in the process of restoration.
According to CTR, the advertising market expenditure in July fell by 8.7% year-on-year, and the decline continued to narrow and was basically the same month-on-month. media, the expenditure of elevator LCD in January to July 2022 increased by 3.5% year-on-year, a slight decrease of 0.4ppt from January to June; the expenditure of elevator posters in January to July 2022 increased by 6.7% year-on-year, a slight decrease of 1ppt from January to June; the expenditure of cinema video advertising in January to July 2022 decreased by 54.6% year-on-year, an slight decrease of 3.4ppt from January to June. points to the advertiser industry, the top three expenses for from January to July 2022 are food, beverages and medicines. In addition, the growth rate of advertisements for pharmacies, alcoholic beverages and transportation industries in July may be relatively obvious. We believe that looking forward to the whole year, the external environment is still facing a lot of uncertainty, and advertisers' overall budget may be cautious, while at the structural level, the short-term marketing focus is expected to continue to shift towards sales. In this context, advertising industry companies will deepen their internal strength and release more effectiveness after the environment further improves.
Film and Television Theater: The national box office continued to recover in August, and the Mid-Autumn Festival box office performed smoothly. Pay attention to the pace of scheduled National Day.
According to Yien data, the national box office was 3.39 billion yuan in August 2022, an increase of 82.8% year-on-year, and the box office in all segmented cities increased year-on-year; among the film investment companies, Wanda Film continued to rank first, and Hengdian Cinemas remained second, with market share of 15.8% and 3.8% respectively. At the same time, the 2022 summer season has come to an end (statistical cycle from June 15 to August 31), and the national box office excluding service fees was 7.61 billion yuan, an increase of 33.8% year-on-year, setting the best result since the epidemic. We believe that the summer season will weaken due to the impact of the epidemic and the gradual supply of top content such as "Lonely Moon" is an important reason for box office growth, but problems such as strengthening the head effect and shortening the promotion and distribution window period still need to be improved. In addition, the just-concluded Mid-Autumn Festival in 2022 achieved a box office of 334 million yuan without service fees, a year-on-year decrease of 26.3%. We judge that the newly released films are relatively lacking in top content, so the box office performance is generally dull. The current industry focuses on the scheduled schedule for the National Day holiday. We judge that if the epidemic is generally controllable, key videos are expected to be scheduled one after another. It is recommended to pay attention to the subsequent scheduled schedule.
Book Publishing: The off-season in August was under pressure, and the book market declined.
Overall market situation: According to the opening information, the physical store index of the national book retail market in August 2022 was 130.35, a year-on-month decrease of 21.36%/23.99%, mainly due to the impact of holiday fluctuations. In terms of consumption of short videos and live content: According to huge amounts of calculation data, the average daily viewing volume of short video content related to Douyin Book publishing in August 2022 (July 25-August 24) decreased by 21.6% month-on-month, and the average daily viewing number of people watching related live content decreased by 36.9% month-on-month, both of which declined compared with the peak in July. We judge that the month-on-month decline in the book market physical store index is mainly due to August between the summer vacation and the start of the school season, which is the traditional off-season for marketing and activities in the book publishing industry, and the channels of short videos and live broadcasts have also been greatly affected; in addition, the year-on-year decline in the book market physical store index gradually narrows. We believe that the main reason is that the domestic epidemic is marginally alleviated and the channel repair may continue.
Risk warning: epidemic has repeatedly exceeded expectations, the macroeconomic prosperity has declined, and industry regulatory policies continue to become stricter.
Retail Light Industry Beauty HTML
According to the social retail data released by the Bureau of Statistics: the total social retail sales in August was 3.63 trillion yuan, up 5.4% year-on-year. Under the combined influence of factors such as low base and gradual reduction in the impact of the epidemic, the growth rate increased by 2.7ppt month-on-month, and the three-year compound growth rate was 2.8%. The total retail sales in January-August increased by 0.5% year-on-year, with a growth rate increasing by 0.7ppt month-on-month, and overall consumption showed a steady recovery trend. Among them, the required categories show resilience, and the upgraded categories such as gold, silver, jewelry, cultural office users performed well, and automobile sales accelerated month-on-month. In addition, service consumption has recovered significantly, and the growth rate of catering has turned from negative to positive month-on-month, and the online penetration rate continues to increase. Specifically:
1. By business model: August's retail sales increased by 5.1% year-on-year, and catering revenue increased by 8.4% year-on-year, +1.9ppt/+9.9ppt compared with July's minute, driven by factors such as the issuance of consumption coupons, the increase in summer travel, and the transformation of enterprises online, the growth rate of catering turned from negative to positive month-on-month, with significant improvement.
2. Look at it by channel: online, the online retail sales of physical goods in August increased by 5.8% year-on-year, with an online penetration rate of 25.6%, an increase of 1.7ppt year-on-year. The trend of onlineization continued. The online retail sales of physical goods from January to August increased by 16.5%/4.0%/4.8% respectively; offline, physical operations continued to improve. The retail sales of supermarkets, convenience stores and department stores above the limit in January to August increased by 4.1%/+4.8%/-6.6% year-on-year, and the growth rate remained unchanged/+0.2ppt/+0.8ppt respectively.
3. Look at the following categories: the post-cycle category of real estate continues to be under pressure, with building materials, furniture and home appliances -9.1%/-8.1%/+3.4% year-on-year, and the growth rate declined by 1.3/1.8/3.7ppt respectively month-on-month. The categories with better performance are mainly required consumption, some upgraded categories and travel consumption. ① Must-choose categories: In August, beverages, tobacco and alcohol, grain, oil and food, Chinese and Western medicines, etc. were resilient, with a year-on-year increase of 5.8%/+8.0%/+8.1%/+9.1% respectively, with a growth rate increasing month-on-month; ② Optional categories: In August, gold, silver and jewelry, cultural office supplies, and textiles and clothing performed relatively well, with a year-on-year increase of 7.2%/+6.2%/+5.1% respectively; but the cosmetics category was -6.4% year-on-year, with a growth rate falling by 7.1ppt month-on-month. We believe that August is the off-season, and we will focus on the sales situation of "Double 11" in the future; ③ The growth rate of automobile retail sales rebounded by 6.2 compared with July, and rebounded month-on-month.
4. Looking forward to the future, we believe that as the epidemic situation in various places is gradually controlled, measures such as stabilizing growth, promoting consumption, and helping enterprises alleviate difficulties will be further implemented, and the supply and demand side will be continuously recovered, and consumption is expected to continue to recover.
Risk warning: The recurrence of the new crown epidemic; the downward risks of macroeconomics; the intensified risks of industry competition.
Home appliances
The overall domestic epidemic in August was stable, and the continued large-scale and high-intensity high temperature weather continued to drive the air conditioner sales. According to the latest data from the Bureau of Statistics, the total retail sales of home appliances in August was 72.4 billion yuan, a year-on-year increase of 3.4%. The growth rate declined compared with July, but it still maintained steady growth. From January to July, the total cumulative retail sales of home appliances was 599.9 billion yuan, a year-on-year increase of 1.6%, further expanding compared with the cumulative year-on-year growth rate from January to July. The high temperatures across the country that continued in
8 continued to benefit air conditioner sales. According to data from Aowei Cloud Network, the online and offline retail sales of air conditioners in August increased by 61% and +18% year-on-year respectively. From the perspective of branches: Midea's online and offline retail sales in August increased by 94% and +13% year-on-year respectively; Gree's online and offline retail sales increased by 30% and +23% year-on-year respectively; Haier's online and offline retail sales increased by 72% and +13% year-on-year respectively; Hisense's online and offline retail sales increased by 66% and +48% year-on-year respectively. Overall from July to August: the online and offline retail sales of air conditioners increased by 38% and +0.5% year-on-year respectively, and the growth rate of online retail increased significantly, and the growth rate of offline retail sales turned positive. We believe that the improvement in air conditioner sales will be conducive to the stable growth of air conditioner manufacturers' revenue in 3Q22. In addition, the impact of the decline in raw material prices may be reflected in the third quarter, and air conditioner manufacturers will fully benefit from the profit "scissors gap".
kitchen appliance cost conduction speed is slower than other market segments, and the overall profit margin in 2Q22 declines, but we expect improvement in 3Q22. Small appliance market differentiation: 1) Cleaning appliances ended their high growth in 2020 and 2021. Global demand for cleaning appliances in 2022 was lower than expected, and the trend of price reduction for flagship products appeared.However, we draw on the price war in the air conditioner market in 2015. In the short term, the market will worry about intensifying competition and poor market demand, but it is easy to ignore the long-term growth space of the market and the increase in the concentration of leading shares in the market reshuffle. 2) The competitive landscape of small kitchen appliances has improved.
The revenue of export companies was negatively affected by the decline in demand in Europe and the United States, but benefiting from the high elasticity of profits in the depreciation of the RMB, typical such as Xinbao, Lake and Fujia in 2Q22 net profit attributable to shareholders +114%/+92%/+100% year-on-year respectively. According to data from the General Administration of Customs, in August, the amount of my country's electricity exports (in US dollars) fell by 16.5% year-on-year, but the decline increased compared with July. According to the 1H22 observation released by overseas home appliance companies, Europe is facing greater pressure to decline in demand. Judging from the 1H22 performance that A-share home appliance companies have released, the performance elasticity brought about by exchange rate depreciation has begun to be reflected in export-oriented companies.
Europe is short of energy, energy prices have risen sharply, and demand for heat pumps has increased significantly.
Risk warning: market demand fluctuation risk; market competition intensifies risk; raw material price fluctuation risk.
Food and beverage
6 Consumption continued to recover in August, and the margin continued to improve. According to data from the National Bureau of Statistics, the total retail sales of consumer goods increased by 5.4% year-on-year in August, with a significant improvement in marginal growth rate, and the overall recovery trend continued to improve. By category, the retail sales of grain, oil and food in August increased by 8.1% year-on-year, while the retail sales of beverages, tobacco and alcohol increased by 5.8% and 8.0% year-on-year. We recommend that the liquor leader with reasonable valuation is relatively low, the beer industry with stable demand and significant decline in costs, and the quick-freezing leader whose industry is still in the expansion period.
Liquor: Mid-Autumn Festival consumption is stable, demand is structurally weak. The epidemic spreads at many points across the country, and many places have introduced policies to encourage local festivals. The overall consumption of liquor Mid-Autumn Festival is relatively stable, the demand for gifts has increased, and mass consumption is average. The recovery of banquets and other scenarios is slow due to the epidemic. The consumption performance of each region is differentiated, with the south being better than the north and the non-epidemic areas being better than the epidemic areas. According to our channel research, most manufacturers are slower than last year's purchase pace, and terminals and consumers are cautious in stocking. In August, new social financing was 2.43 trillion yuan, a year-on-year increase of 559.3 billion yuan, higher than Wind's consensus estimate of 2.04 trillion yuan; in August, CPI rose 2.5% year-on-year, and PPI rose 2.3% year-on-year. CICC Macro Group believes that the epidemic and real estate are the two most important factors affecting demand at present. Fiscal investment is accelerated, policy-based financial tools continue to be put in place, and policy-based strengthening and implementation are conducive to stabilizing growth. We believe that the market has expected a stable performance in the Mid-Autumn Festival peak this year, and National Day is expected to improve month-on-month.
Beer: Sales recover in the peak season in the second half of the year, and the decline in costs and high-end performance are expected to improve the industry's profit-side performance. 1) We expect the impact of the epidemic on the current drinking channels in the second half of the year may further narrow. The recovery of demand for tourism and other needs will drive the recovery of current drinking channels. At the same time, the high temperature in summer will also promote beer consumption. We expect that based on the low base last year, beer sales performance in the third quarter will continue to improve, and the overall sales for the whole year are still expected to remain flat. 2) The overall raw material price has reached a turning point, and the cost pressure may ease from the fourth quarter of this year to next year. From the beginning of the year to the end of August, the costs of barley/aluminum/carton/glass bottles and other materials changed by 24.7/22.8/2.7/-13.2% year-on-year. The current prices of other packaging materials except aluminum are significantly lower. In addition, the industry leaders have locked the prices of barley and other raw materials, and the overall cost is basically within a controllable range. We expect overall costs may be in a downward trend next year, which can improve the industry's gross profit margin. 3) High-end performance is still steadily advancing, and the performance of high-end single products has brought a strong momentum ton price increase.
Volkswagen products pay attention to the trend of falling costs and sales improving with the recovery of the B-end: the off-season performance from 7 to August is stable, and sales are expected to improve in the peak season of winter; at the same time, the continued improvement of B-end catering can also bring about a recovery in sales. Dairy products: The short-term epidemic may disturb the Mid-Autumn Festival sales. seasonings: The epidemic slows down + soybean costs begin to decline to drive the industry's fundamentals toward a turning point. snacks: 1H22 performance ended, the epidemic and cost disturbances in 2Q22 are quite large, and the performance of individual stocks is differentiated. It is recommended to pay attention to the sales situation and cost-end improvement in the Mid-Autumn Festival peak season. Soft Drinks: 1H22 Head beverage companies still show revenue resilience.
Risk warning: weak demand, fluctuations in raw material prices, and food safety risks.
[1]https://iri.columbia.edu/our-expertise/climate/forecasts/enso/current/
[2]https://www.ndrc.gov.cn/xwdt/xwfb/202204/t20220419_1322416.html?code=state= 123
[3]http://tradeinservices.mofcom.gov.cn/article/news/gnxw/202209/137930.html
Article source
This article is excerpted from: "Interpretation of August Economic Data and Asset Allocation"
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