China Coating Industry Market Status and Development Prospect Analysis in 2020

Industry chain analysis of the paint industry

The upstream industry of coating industry includes chemical raw materials manufacturing industry such as resin, solvent, color filler and additives, while the upstream of chemical raw materials such as resin and solvent is petrochemical industry. The downstream of the coating industry is mainly the construction, furniture, automobile, home appliance and other manufacturing enterprises and home decoration market.

The influence of upstream raw materials on the industry is mainly reflected in two aspects: firstly, the stability of production scale affects the stability of raw material supply in the paint industry; secondly, the price of raw materials affects the production cost of paint. The impact of downstream product market on the paint industry is mainly reflected in the market scale and development trend of paint.

China's paint production exceeds 24 million tons

China's paint production and start-up rate have rebounded in recent years, with high potential for market development. In terms of supply, from 2014-2019, the output of China's coatings industry rose year by year, and the output has reached 24.388 million tons in 2019, up slightly from 2018, with a year-on-year growth of 2.60%; the compound annual growth rate is 9.27%.

Analysis of the market competition pattern of China's paint industry

There are many enterprises participating in the market competition in the paint industry, and the industry competition is relatively fierce. Under the full market competition, the market share of the industry is gradually concentrated to the famous brand enterprises, and presents a more obvious echelon level.

The first echelon of enterprises: the whole line covers the coating industry products, and has a certain strong leading position in the field of functional and special coatings, such as PPG, Xuanwei, Lipan, Akzo Nobel and other multinational coating groups.

The second echelon companies: have strong competitive advantages in some segments of the paint industry, such as Carpenter, Sankey, Aspect, China Resources Paint, Orient Rainbows, etc. Among them, Sankey's wall coatings have strong competitive advantages, and it is among the top 10 global listed companies in the market value of global coatings in 2020.

The third echelon enterprises: through the production of low-quality and low-price products to obtain profits, in terms of technical strength, production scale, research and development are at a disadvantage, the competitiveness is weak; a large number of small domestic paint production enterprises in the third echelon.

Analysis of the performance of local listed paint companies in China

In the first half of 2020, among China's local coating listed companies, Dongfang Yuhong had the highest operating revenue, reaching 8.783 billion yuan, far ahead of other companies; followed by Keshun and Sankeshu, with operating revenue of 2.659 billion yuan and 2.595 billion yuan respectively.

Among the Top5 local Chinese coating listed companies in terms of revenue in the first half of 2020, Keshun shares had the largest year-on-year increase in operating revenue, reaching 34.70%; while China Electric Research achieved negative growth, with operating revenue of 1.086 billion yuan in the first half of the year, down 21.76%.

In the first half of 2020, the net profit trend of listed companies in coatings remained basically consistent with the operating income, the top three are Orient Rainbows, Keshun shares and China Electric Research, net profit of 1.097 billion yuan, 290 million yuan and 129 million yuan in turn. The net profit of ASTRONET in the first half of the year was RMB 111 million, and the net profit of Feikai Materials in the first half of the year was RMB 110 million, slightly more than the RMB 109 million of Sankeyu, ranking fifth.

Analysis of the development prospects of China's paint industry

The "Thirteenth Five-Year Plan" of China's coating industry points out that, benefiting from the demand pull from both industrial and civil sectors, the total economic volume of the industry will keep growing steadily during the "Thirteenth Five-Year Plan" period, with an average annual growth of about 6.5% in the bottom line of total output value. By 2023, the total output value of the paint industry is expected to grow to about 690 billion yuan; production is calculated at an average annual growth rate of 5%, and by 2020, the total output of the paint industry is expected to grow to about 27 million tons.

Looking ahead, considering that the growth rate of China's paint production in 2019 is only 2.60%, and the factory start-up rate will be greatly affected under the continued influence of the new coronavirus pneumonia epidemic in 2020, the annual paint production is expected to decline to about 23 million tons in 2020. In the future, China's paint production will grow at a CAGR of 2.6%, and by 2025, the national paint production will be close to 27 million tons.