CICC architectural coatings: how to break through the market stratification?


In the past few years, leading enterprises have rapidly expanded their revenue scale through centralized purchase, so as to reduce costs and reduce prices to seize the share of small enterprises (CR3 has rapidly increased to 22%).

We can see that paint leaders such as sankeshu have continuously increased the layout of the interior wall market in recent years, expanded high-end stores in the form of large stores and direct stores, grasped the service trend, strengthened the investment in product promotion, cut into young consumers and seize their minds.

Therefore, the coating market is not a unified market, but consists of five markets.

The core barrier lies in brand and channel, in which brand plays a role in arousing customers’ impression, and channel plays a role in realizing customers’ purchase and landing; however, due to the differentiation of customer structure competition barriers, large B customers choose brand, small B customers focus on channel, and C End customers pay attention to both.

Looking forward to the future, we believe that with the upgrading of consumption and the acceleration of repainting frequency, the market scale is expected to rise steadily to 92 billion yuan in 2030 (CAGR is 5.9%), but the market is divided (the growth rate of C end / small B exceeds 5%, while the big B stalls) For the core C-end market, the rise of repainting and the appearance of decoration will drive up the service demand.

We disassemble the five major markets in detail and deconstruct a more comprehensive and three-dimensional coating market.

The interior wall Market: brand first, intensive cultivation, gradual transformation, and service upgrading drives the channel transformation.

At this stage, due to the significant first mover advantage of foreign-funded enterprises, perfect channel layout and high brand awareness, there is a pattern of “one super and many strong” in China.

Architectural coatings mainly include wall coatings, waterproof coatings, floor coatings and functional architectural coatings.

Data source: Official Website of the company, company announcement, why the construction coating market of the research department of CICC is stratified? Architectural coating – strong consumption attribute, architectural coating and internal and external wall information of buildings Interest related.

Therefore, the coating market can be composed of five major markets.

However, the domestic high-rise building system determines that there are great differences in the internal and external wall market (the floors in developed countries are low, and the internal and external walls are dominated by households), in which the external wall market is completely the b-end market (main participants include developers, governments, engineering dealers and other big B / small b) The interior wall market is dominated by three types of customers: C-end / small B / large B due to different types of buildings.

However, due to the differentiation of customer structural barriers, big B selects brand, small B focuses on channel, and C pays attention to both.

Due to the differences between internal and external walls and customers, the construction coating market is significantly layered and non-homogeneous.

We estimate that the current exterior wall market scale is about 45 billion yuan, and the downstream customers mainly include engineering customers such as real estate developers / government / Engineering dealers, which is the real B End market, “price” The competition is fierce, and the scale advantage is the core barrier.

Due to the domestic high-rise building system / professional painting, this market is an engineering market with fierce competition.

We can be divided into large B / small B customers according to the type of buildings (real estate / non real estate).

In the past few years, with the support of capital market financing, leading enterprises have rapidly expanded their income scale through centralized procurement, continuously reduced costs, reduced prices, expanded production capacity, and accelerated to seize the share of small enterprises.

In 2030, the real estate market (big b) will gradually weaken, but the repainting of exterior walls of huge stock buildings will quickly supplement the demand, and the non real estate market (small b) is expected to expand steadily (CAGR is 6.0%) , and the project flow is gradually concentrated in the engineering dealer channel.

At the same time, they can be divided into new coating and re coating according to the number of house painting.

At present, the scale of the exterior wall market is about 45 billion yuan, and the downstream customers are real estate / Engineering dealers.

Text Overview the stratification and Deconstruction of the coating market architectural coatings, as consumer building materials, are both decorative and functional, and the consumption premium is sufficient.

However, they emphasize the exquisite service for C-end / small B, and move closer to Xuanwei’s direct store model.

Professional service providers will gradually replace store channels, and the requirements for the number of channels will decrease.

The customer types and product performance of each market are quite different, and each market has different competition pattern, moat and development trend Potential.

Nippon’s retail revenue in 2020 is about 9 billion yuan (accounting for about 17%) , Nippon, Dulux and sanjeshu will account for 24% of the total market in 2020.

We can see that after completing the scale accumulation, leading enterprises such as sanjeshu / Yashi Chuang Neng are accelerating the layout of engineering channel resources, focusing not only on providing labor and material contracting services for end customers through small B, but also on controlling the flow entrance in the future.

Looking ahead, we estimate that it will peak with the urbanization rate The real estate cycle is down.

Cast In Loop

Looking forward to the future, we estimate that with the decline of the real estate cycle, the real estate market (big b) will gradually weaken in 2030, but the repainting of exterior walls of huge stock buildings will be quickly supplemented, and the non real estate market (small b) is expected to expand steadily (CAGR is 6.0%), and the project flow is gradually concentrated in the engineering dealer channel.

Looking forward to the future, we believe that with the upgrading of consumption and the acceleration of repainting frequency, the market scale will steadily increase to 92 billion yuan in 2030 (CAGR is 5.9%), but the market is divided (the growth rate of C end / small B exceeds 5%, while the growth rate of big B loses speed) [1] for the core C-end market, repainting, the increase of all inclusive ratio and the appearance of decoration will drive the upward demand for services, and professional service providers will gradually replace store channels.

Each market has different barriers and development trends.

Exterior wall Market: scale is king, speed up to expand market share and grasp the small B channel.

The “price” competition is fierce, and the scale advantage is the core barrier.

At present In this period, there is a pattern of “one super and many strong” in China, and the retail revenue of foreign capital Nippon is about 9 billion yuan (accounting for about 15%).

Among them, wall coatings occupy most of the market of architectural coatings and are mainly applied to the internal and external walls of buildings (including residential and engineering buildings).

We deconstruct a more comprehensive and three-dimensional coating market by dismantling the five major markets in detail and giving a judgment on the development trend.

We believe that the exterior wall and interior wall coating markets are two diametrically opposite markets.

Interior wall Market: brand first, intensive cultivation needs to be slowly planned, and service upgrading Drive channel transformation.

In 2020, Nippon / sankeshu / Yashi’s total market share in the exterior wall market was 22%.

Therefore, the realization effect of channel traffic is weakened and the quantity requirements are reduced.

The price rise of risk raw materials exceeds expectations, the industry competition intensifies, and the recovery of accounts receivable is less than expected.

Chart: market scale and future of the five major markets Spatial data source: Official Website of the company, bureau of statistics, Wande information, research department of CICC; note: refer to the specific calculation chart in Figure 10 / figure 23: Figure 1 to analyze the stratification and trend of the architectural coating market.

At present, the scale of the interior wall market is about 52 billion yuan, and the core barrier lies in brand and channel.

Exterior wall Market: mainly decorative.

More emphasis is placed on the exquisite service of C-end / small B, moving closer to the Xuanwei model At the same time, the brand is still the leading tool at the C end, and it can also increase the investment in product promotion for the small B foreman.

Architectural coatings have both decorative and functional properties, and the market stratification is significant.

Exterior wall Market: scale is king, speed up to expand market share, and pay close attention to small B channel.

Our customers × The product market is divided into five matrix markets, and the elements, barriers and trends of each market are deconstructed to keep close to the core competitiveness of sanjeshu / Yashi Chuang Neng.

There are great differences in customer types and product performance in each market, and each market has different competition pattern, moat and development trend.

We estimate that the current interior wall market is about 52 billion yuan, which needs to be accumulated over a long period of time.

Interior wall Market: mainly functional, with sufficient consumption premium, including C / small B / big B customers, which dominate the interior wall markets of residential blank houses, public buildings and hardbound houses respectively.

It is a real b-end market.

The natural endowment of architectural coatings endows them with strong consumption attributes..

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