Recently, the consequences of a series of real estate regulation policies implemented by the state have finally emerged, with sharp declines in housing prices in first-tier cities and even second- and third-tier cities. Against this backdrop, some media outlets have claimed that winter is coming for the property market. So, how are companies closely related to the real estate industry, such as underfloor heating companies, currently faring? Our newspaper has conducted an investigation into mainstream underfloor heating pipe companies, underfloor heating installation companies, electric underfloor heating companies, and gas heating hot water furnace companies within the industry.
The wind still favors pipe companies
"Overall, it's very good; our performance this year has increased by more than 30% compared to last year," said Wang Mingke, vice general manager of Hongyue Plastic Pipe Co., Ltd. (shortened as "Hongyue Pipe Industry"). It was understood that before August this year, despite being in full production capacity, the company’s PE-Xa pipes were still unable to meet current market demands. To resolve the supply-demand conflict, the company recently added 16 new PE-Xa pipe production lines, all of which have now completed debugging and entered production.
The momentum of domestic brands continues, while foreign brands perform less satisfactorily
Even though they have added production lines, Hongyue Pipe Industry's current production status remains very tight.
"Normally, after October every year, many companies' underfloor heating pipe production lines are in a state of shutdown or semi-shutdown, but currently, our company's PE-Xa pipe production lines are still operating at full capacity," Wang Mingke proudly said.
Similar to Hongyue Pipe Industry, Tangshan Daocheng Pipe Industry Co., Ltd. (shortened as "Daocheng Pipe Industry"), Hebei Ritai New Type Pipe Co., Ltd. (shortened as "Ritai Pipe Industry"), and Henan Ruize Pipe Industry Co., Ltd. (shortened as "Ruize Pipe Industry") are also performing well in their current production situations. According to Li Weiliang, marketing director of Daocheng Pipe Industry, currently, 75% of Daocheng Pipe Industry's PE-Xa pipe production lines are still operating at full capacity, which far exceeds the level of previous years. Li Weiliang's statement was confirmed by Zhu Hong, marketing director of Ritai Pipe Industry, and Guo Jinguo, general manager of Ruize Pipe Industry: currently, the startup rate of these two companies' PE-Xa pipe production lines remains at around 75%, significantly higher than in previous years.
Due to the high startup rate of PE-Xa pipe production lines throughout the year, these companies have achieved varying degrees of growth in their performance compared to the same period last year. Last year, Ritai Pipe Industry and Daocheng Pipe Industry did not perform ideally, but this year, they have made a beautiful comeback, with performances increasing by about 40% and 50% respectively compared to the same period last year.
Similar to the booming situation of PE-Xa pipe production companies, the business of PE-RT pipe production companies has also been very good this year.
"In fact, by early November this year, our company had already exceeded its annual production target, and it is estimated that our company's total output value will exceed 2 billion yuan this year, increasing by more than 50% compared to last year," said Luo Jianguang, manager of SK Jin Chao Plastics Co., Ltd. (shortened as "SK Jin Chao").
Like SK Jin Chao, other PE-RT pipe production companies, Tianjin Junxing Pipe Industry Group Co., Ltd. (shortened as "Junxing Pipe Industry") and Wuhan Jinniu Pipe Industry Co., Ltd. (shortened as "Jinniu Pipe Industry"), have also performed well this year. It was understood that the performances of these two companies have both increased by approximately 40% compared to last year. Zhu Jianfeng, vice general manager of Jinniu Pipe Industry, stated that although it has entered the traditional sales off-season, Jinniu Pipe Industry's PE-RT pipe production lines are still operating at full capacity and are still unable to meet current market demand.
Compared to many domestic brands, many foreign underfloor heating pipe companies have performed less satisfactorily this year.
"Our company's goal this year was to increase sales performance by about 50% compared to last year, but due to the impact of the country's real estate regulation policies, it actually only increased by about 28%," said Jiang Changxin, sales director of China Wenven? Foshan Xiehe Angu Pipe Fittings Co., Ltd. (shortened as "Wenven"). Similar to Wenven, Shanghai George Fischer Pipe Systems Co., Ltd. (shortened as "George Fischer") also did not achieve a high increase in sales performance compared to last year, reaching only 25%.
Regarding the reason for the slower growth of Wenven's performance this year compared to last year, Jiang Changxin believed that the severity of China's real estate regulation policies this year was completely unexpected. In this environment, the construction speed and delivery progress of some commercial properties have clearly slowed down. The reduction in the scale of commercial property construction has caused the market share of their company to shrink.
In addition, some insiders pointed out that foreign brands like Wenven and George Fischer are positioned at the higher end and are relatively expensive. Currently, affected by national regulation policies, many real estate companies are experiencing extremely tight capital chains. To save costs, they generally prefer to adopt some mid-range domestic brands that are relatively cheaper but still reliable in quality.
Recently, most northern regions welcomed the first snowfall of winter. Under the backdrop of encountering strict regulation policies, the under-construction residential buildings covered in snow, despite having installed underfloor heating systems, still exude a bit of coldness.
Optimism for next year's market conditions should be cautious
Despite the fact that real estate regulation policies have already impacted some pipe companies, and there is no sign of easing, the pipe companies whose performances were outstanding this year do not seem worried about next year's market conditions.
"The market conditions next year should be good," said Zhu Jianfeng, vice general manager of Jinniu Pipe Industry. According to his introduction, although the implementation of real estate regulation policies by the state has reduced the number of commercial property projects started, the number of government-led affordable housing projects started has increased. With one decreasing and the other increasing, the total number of real estate projects started has not decreased but is increasing annually with the acceleration of urbanization in our country, undoubtedly providing a huge business opportunity for pipe companies. Zhu Jianfeng's viewpoint was agreed upon by Xia Yongwen, general manager of Junxing Pipe Industry, Guo Jinguo, general manager of Ruize Pipe Industry, and Wang Mingke, vice general manager of Hongyue Pipe Industry, who are all optimistic about next year's market conditions.
However, some responsible persons from pipe companies reminded that pipe companies should be cautious about next year's market conditions and should not be overly confident.
"We are not too optimistic about next year's market conditions, even though our company's sales market is mainly concentrated in second- and third-tier cities that are less affected by the country's real estate regulation policies. However, with the intensification of the country's real estate regulation policies, we can already feel the impact on some second- and third-tier cities. Some clients and developers who intend to use our pipes have reported that their funds are currently very tight," said Li Weiliang, marketing director of Daocheng Pipe Industry. Regarding whether Daocheng Pipe Industry can continue to grow at this year's rate next year, Li Weiliang said, "To be honest, we don't have confidence."
Regarding Li Weiliang's concerns, Zhu Hong, marketing director of Ritai Pipe Industry, has already felt something similar: "Due to the tightening of developers' capital chains, currently about 40% of our company's receivables cannot be recovered on time." To prevent an increase in bad receivables, Ritai Pipe Industry has been forced to implement a policy of "no cash, no shipment." It was understood that this measure has already begun to be implemented in multiple pipe companies.
Besides real estate regulation policies, what worries Zhu Hong even more is that in such a depressed market environment, there are actually four southern pipe companies preparing to build four new factories covering over 400 mu in Northeast China next year, which is undoubtedly adding insult to injury for pipe companies facing increasingly fierce competition.
"In an unclear market environment, it is difficult for companies to achieve breakthrough development. If our company's performance next year can increase by 30% compared to this year, we would be quite satisfied," said Luo Jianguang, manager of SK Jin Chao. Despite this growth rate being 20 percentage points lower than the company's growth rate this year.