20180613-广发证券_香港_-China_Steel_Sector__FAI_Completion_in_4M18_higher_than_in_previous_years__1Q_seasonal_factors_to_drive_June_demand_4页_535kb
报告摘要
China Steel Sector Summary
Core Content
The document provides an analysis of the steel sector in China, focusing on the Fixed Asset Investment (FAI) trends, downstream demand drivers, and investment outlook for 2018. It highlights the role of construction, machinery, and automotive industries in steel demand, as well as the impact of policy and environmental factors on the sector.
Main Views and Key Information
Downstream Demand Drivers
- Primary sectors contributing to steel demand: Construction (including property and infrastructure), Machinery, and Automotive.
- In 2017, these sectors accounted for 53%, 19%, and 8% of total steel demand respectively, or 80% combined.
- Property development is a key indicator of steel demand, alongside new starts floor space and floor space sold.
- Infrastructure investment and FAI in the manufacturing sector are also used to track demand.
- FAI investment accounts for 75% of total steel demand in the property, infrastructure, and manufacturing sectors.
FAI Completion Trends
- FAI completion rate in provinces tracked reached 98.32% on average during 2011-2017, with a declining trend over the years, ending at 95.56% in 2017.
- Zhejiang had the highest completion rate, while Liaoning had the lowest.
- Completion rates in eastern, southern, and central regions were higher than in western and northern regions.
- In 2018, planned FAI in provinces tracked increased by 9.62% YoY, with Tibet showing the highest growth.
- During Jan-April 2018, the average completion rate was 22.88%, higher than the 2011-2017 average, with 80% of provinces experiencing normal or faster progress.
2018 Outlook
- FAI completion rate is expected to remain stable, similar to 2016-2017.
- Real FAI growth is projected to be 0.54%–1.63% in 2018, indicating slight downstream demand growth.
- Neutral monetary policy and domestic demand expansion are expected to support the steel sector.
- Shortened approval times for construction projects (from 200 to 120 working days) should accelerate investment and construction progress.
Investment Recommendations
- Environmental protection measures are expected to suppress steel capacity and production.
- Pessimistic expectations on downstream demand may be corrected due to seasonal factors.
- Positive outlook on investment opportunities in the steel sector.
- Suggested companies: Baoshan Iron & Steel (600019 CH), Nanjing Iron & Steel (600282 CH), Xinyu Iron & Steel (600782 CH), SGIS Songshan (000717 CH), and Fangda Special Steel Technology (600507 CH).
Risks
- Unexpected economic slowdown.
- Changes in monetary policy.
- Lower-than-expected FAI completion rate in 2018.
- Environmental protection measures leading to lower steel production.
- Less strict government supervision on environmental protection.
Key Figures and Data
- Figure 1: Downstream steel demand is mostly influenced by construction, with machinery and automotive showing stable trends.
- Figure 2: Construction remains the main driver of demand fluctuations during 2012-2017, while the impact of machinery on total demand has weakened.
- Figure 3: Property development investment declined slightly MoM in Jan-April 2018, but remained higher than 2016, indicating resilience.
- Figure 4: Infrastructure investment is still a weak component of FAI, but has started to improve.
- Figure 5: Manufacturing sector FAI rebounded MoM, and is likely to exceed expectations.
Rating Definitions
Company Ratings
| Rating | Definition |
|---|---|
| Buy | Expected to outperform benchmark by >15% |
| Accumulate | Expected to outperform benchmark by 5%–15% |
| Hold | Expected relative performance between -5% and 5% |
| Underperform | Expected to underperform benchmark by >5% |
Sector Ratings
| Rating | Definition |
|---|---|
| Positive | Expected to outperform benchmark by >10% |
| Neutral | Expected relative performance between -10% and 10% |
| Cautious | Expected to underperform benchmark by >10% |
Analyst Certification and Disclosure
- The research analyst certifies that all views expressed reflect personal opinions and that no direct or indirect remuneration is linked to specific recommendations.
- Disclosure of Interests:
- No proprietary shares in the mentioned securities.
- No investment banking relationships with the companies mentioned in the past 12 months.
- Analysts and their associates are not officers of the companies mentioned and have no financial interests in the securities.
Disclaimer
- This report is for informational purposes only and does not constitute an offer to buy or sell securities.
- The research report is intended solely for GF Securities (Hong Kong) clients.
- No liability is accepted for losses arising from the use of the materials, unless excluded by law.
- Investments involve risks, and past performance does not guarantee future results.
- The views in the report are subject to change without notice and may differ from those of the proprietary trading division.
Copyright
- This document is copyrighted by GF Securities (Hong Kong) Brokerage Limited.
- No part of the materials may be copied, reproduced, or re-disseminated without prior written consent.
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