In terms of market performance, the furniture industry index trend outperformed the market in the first quarter of this year. The furniture industry index rose by 8.57%. During the same period, the Shanghai and Shenzhen 300 Index fell by 1.1%, outperforming 9.68 percentage points. The industry trend in the first quarter was in line with our previous year's judgment (industry “overweight†rating).
Domestic real estate has gone out of the doldrums and the industry has improved. Since the second half of last year, the housing market has shown signs of recovery in the wake of the need to purchase houses, showing a rise in volume and price. The worst time for real estate sales has passed. Under the influence of the continued recovery of real estate sales, the furniture industry has improved its economy and showed signs of recovery. As of February this year, the growth rate of furniture manufacturing enterprises above designated size has rebounded to 16%.
US real estate recovery, furniture exports continue to be good. From this year's US new home sales data and existing home sales data, the housing transaction situation continues to pick up. As of February 2013, new home sales increased by 20.75% year-on-year, and existing home sales increased by 9.63% year-on-year, both at historically good levels. Benefiting from the recovery of US real estate, China's furniture exports have continued to recover from the negative growth last year. As of February this year, the cumulative value of China's furniture exports was 8.813 billion US dollars, an increase of 60.20%.
Furniture can be replaced with old ones, and real estate regulation and stability. The effect of the old-fashioned furniture replacement in the previous period exceeded expectations. At present, there is no substantive policy at the government level. However, this year the two sessions proposed that “the need to unswervingly expand domestic demand as a long-term strategic guideline for economic development†and the promotion of furniture trade-in as a domestic consumption promotion policy can be promoted. The implementation is worthy of expectation; the five rules of each country have been successively put on the ground. Generally speaking, this regulation is mainly based on stability, which is in line with our previous judgment on the stability of real estate regulation and control.
With the improvement of the operating environment inside and outside the industry, the recovery of furniture exports, real estate gradually stepped out of the trough, especially in the second quarter of the renovation season, we believe that the furniture industry will continue to maintain good performance, so continue to maintain the industry's "overweight" rating.
In terms of individual stocks, we propose to focus on Yihua Wood, which has abundant forest resources, good export orders and gradually improved domestic sales channels; Sofia, which has a leading production layout in the country, stable growth in performance, and good growth and defense capabilities; Highlighting and accelerating the transition from a single brand to multiple brand operating models, this year's performance is expected to improve the US dollar shares.
Risk warning: (1) The severity of property control is higher than expected, affecting domestic demand in the domestic market; (2) The international economic downturn affects furniture exports; (3) The price of raw materials has risen sharply.
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