It has experienced five steady growth since 2008. Since 2008, it has experienced five times of steady growth. According to the time, it can be roughly divided into 2008 q4-2009 (the introduction of infrastructure 4 trillion yuan and the significant relaxation of real estate regulation), 2011 q4-2012 (the 18th National Congress was held and the main focus of infrastructure), 2014 q4-2016 (the introduction of PPP in infrastructure and the monetization of shed reform boosted the demand for real estate), Q3 in 2018-q1 in 2019 (impact of Sino US trade friction, phased slowdown of deleveraging), 2020 (response to covid-19 epidemic). Among them, the first three policies have made great efforts, infrastructure investment and real estate sales have rebounded sharply, and the effect of credit relief is obvious; The last two policies were relatively moderate, maintaining strict regulation of urban investment platform and real estate, and the rebound of infrastructure was limited.
Typical steady growth can be divided into four stages. Typical steady growth can be divided into: 1) policy shift: generally affected by external factors, or the effect of early tightening policy appears, the downward pressure on the economy increases, and the policy begins to turn to easing. 2) Policy overweight: the steady growth policy continues to be introduced, generally accompanied by loose monetary and fiscal policies, accelerated approval of infrastructure projects, relaxed supervision of financing platforms, introduction of new financing tools, relaxed real estate regulation, etc. 3) The results show that: under the policy stimulus, infrastructure investment rebounded, real estate sales rebounded, the economy stabilized or rebounded significantly, and the growth rate of social finance increased. 4) Policy withdrawal: after the economy stabilizes, the government will express its positive affirmation of economic recovery, and the follow-up policies will gradually withdraw or turn to a new round of austerity to refocus on medium and long-term development issues.
Steady growth choose real estate or infrastructure? All previous steady growth infrastructure projects were important. The first three strong steady growth projects accelerated project approval, relaxed local financing platforms, or created new financing tools (such as vigorously promoting PPP since 2015). Infrastructure investment rebounded sharply or maintained high growth. The last two steady growth policies maintained strict supervision over local financing platforms, mainly relying on the acceleration of the issuance of special bonds by local governments, Investment in infrastructure rebounded only slightly. In 2008-2009 and 2014-2016, both steady growth took strong stimulus to real estate, continuously cut interest rates and reserve requirements, and greatly relaxed real estate regulation. Since 2015, the monetization of shed reform has been accelerated, and real estate sales have significantly warmed up. The steady growth in 2012 and 2020 did not significantly relax the real estate regulation, but the monetary policy was relatively loose, which stimulated the rebound of real estate sales. In 2018, the currency was tight, the regulation was not loose, and there was no significant improvement in real estate sales.
How is the market performance of the steady growth construction sector? The first three steady growth policies were strong. The highest excess returns of the construction sector relative to the CSI 300 range were 34% / 20% / 186% respectively, and the rise lasted for a long time (more than three quarters). The last two steady growth, moderate policy strength, and the highest range excess return of about 10%. The five times of steady growth excess returns are obvious in the policy shift and policy overweight stage (generally lasting for three months). The sustainability of the subsequent sector market depends on the policy effect and the rhythm of policy adjustment. If the infrastructure investment rebounds sharply and the real estate sales pick up significantly, the market can last for a long time until the policy begins to tighten again.
At present, it is in the overweight stage of stable growth policy, and the sector is expected to continue to show excess returns. The emergence of effective financing tools may directly determine the level of this round of infrastructure market. At the end of last year, the central economic work conference officially confirmed that the policy focus shifted to “stable growth”. Subsequently, a series of meetings of various ministries and commissions showed that the policy was increasing, and the central bank had also started to cut interest rates. At present, the policy effect of infrastructure has been reflected in social finance in January, but the economic stabilization signal has not yet appeared. It is expected that the steady growth policy will continue to increase until the economic stabilization is clear. With reference to the previous steady growth market, the sector is expected to continue to show excess income at this stage. Infrastructure is expected to take the lead in the first half of the year, and the subsequent rebound depends on whether new effective financing tools can be introduced (the accelerated issuance of infrastructure REITs may provide some help), or it will directly determine the level of this round of infrastructure market. At present, the real estate policy has been marginal adjusted, but with reference to previous experience, it still needs more policies and time for the bottom recovery of the industry fundamentals. At the present stage, the stock price performance of enterprises related to the real estate chain may continue to differentiate, and the leaders of the high-quality real estate chain benefiting from the industry reshuffle are expected to show a certain excess return.
Investment suggestions: key recommendations 1) undervalued building blue chips: China Communications Construction Company Limited(601800) , China State Construction Engineering Corporation Limited(601668) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) etc., and the leader of infrastructure design China Design Group Co.Ltd(603018) . 2) Steady growth and high business elasticity: a) steel structure: key recommendations Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Anhui Honglu Steel Construction(Group) Co.Ltd(002541) ; b) Affordable housing: key recommendation Shenzhen Capol International&Associatesco.Ltd(002949) ; c) New power system: focus on recommending private distribution network EPCO leader Suwen Electric Energy Technology Co.Ltd(300982) ; d) Urban pipe network: the leader of heating and energy saving is recommended Runa Smart Equipment Co.Ltd(301129) .
Risk tip: the effect of steady growth does not meet expectations, historical experience does not represent the actual situation, and the risk of accounts receivable.
