On February 16, the large infrastructure sector became active again, and individual stocks in the sector set off a “trading tide”. Since this year, a number of policies supporting infrastructure investment have been launched one after another, and infrastructure projects in various localities have started enthusiastically. Industry insiders said that with sufficient infrastructure investment project reserves and financial support, infrastructure investment is expected to advance steadily, the fundamentals of the industrial chain will usher in positive changes, and a number of listed companies are expected to take the lead in benefiting.
major infrastructure sectors benefited significantly
As of the closing on February 16, the shenwanyi building decoration industry index led 31 industry indexes to close up 3.20%, followed by the building materials and steel industry indexes, which rose 1.87% and 1.74% respectively on the same day. Daji construction stocks rose repeatedly. Taking architectural decoration as an example, 17 stocks such as Hangzhou Landscape Architecture Design Institute Co.Ltd(300649) , Hanjia Design Group Co.Ltd(300746) , Hualan Group Co.Ltd(301027) , Palm Eco-Town Development Co.Ltd(002431) and 35 stocks such as Zhejiang Communications Technology Co.Ltd(002061) , bidding shares, Shenzhen Jiang&Associates Creative Design Co.Ltd(300668) rose by more than 5%.
Under the tone of steady growth, the central and local governments accelerated infrastructure investment. The central economic work conference clearly put forward that infrastructure investment should be carried out moderately in advance. The executive meeting of the State Council held on January 10 proposed to accelerate the implementation of 102 major engineering projects and key projects of special planning identified in the outline of the 14th five year plan. At the executive meeting of the State Council held on February 14, it was proposed to promote the strengthening of manufacturing chains and the reconstruction of industrial infrastructure, accelerate the construction of new infrastructure and the transformation of energy-saving and carbon reduction technologies in key areas, and expand effective investment.
Local infrastructure projects have also been launched recently. The centralized commencement ceremony of provincial key construction projects has been held in Hubei Province, Fujian Province, Shaanxi Province and other places, and more than 10 provinces and cities have announced the investment list of major projects in 2022. In terms of new infrastructure, the Ministry of industry and information technology, the national development and Reform Commission and other departments have made it clear that 5g, data center and other new infrastructure construction will be moderately deployed in advance. More than 20 provinces have made clear the construction plans of 5g and data center in 2022, so as to further give full play to the scale effect and driving role of 5g and other new infrastructure. “The acceleration of new infrastructure investment is becoming an important starting point for steady growth in all regions and a key factor in promoting sustainable urban development.” Roland Berger global partner Jiang Hao said.
In this context, the large infrastructure sector has performed strongly this year. According to the data, as of the closing on February 16, Yinhua infrastructure ETF has increased by 6.17% since the Spring Festival, Cathay Pacific Building Materials ETF and Wells Fargo building materials ETF have increased by 6.72% and 6.80% respectively, and Cathay steel ETF has increased by 6.38% after the festival. Northbound funds also increased their positions in the infrastructure sector. According to the data, among the seven industries with the highest net purchase amount of northbound funds in the past month, public utilities, building materials and transportation ranked among them, with net purchases of 1.916 billion yuan, 1.212 billion yuan and 946 million yuan respectively.
investment value in multiple segments is concerned
As one of the general directions of “steady growth”, the industry generally believes that the upward trend of infrastructure investment is more deterministic, and the fundamentals will usher in positive changes.
Sufficient infrastructure investment project reserves will first form support for the infrastructure industry chain. Sheng Songcheng, a professor at China Europe International Business School and former director of the survey and Statistics Department of the people’s Bank of China, recently wrote that the current reserves of infrastructure investment projects are sufficient. From the project side, the national development and Reform Commission requires the application of special bond projects in advance. As of February 12 this year, 1831 PPP (cooperation between government and social capital) projects in China have been put into construction and operation, with an investment of 2.72 trillion yuan; There are also reserve projects with a total investment of 8.33 trillion yuan to be put into construction and operation.
On the capital side, Gf Securities Co.Ltd(000776) pointed out that the social finance data has increased rapidly recently, and the Ministry of finance has issued a new special debt limit of 1.46 trillion yuan in 2022 in advance, which is significantly improved compared with the same period last year. At the same time, considering that there are still some special debts not carried forward at the end of 2021, they are expected to form a financial support for infrastructure investment in the first half of this year. Sealand Securities Co.Ltd(000750) also said that the special bonds were approved in advance, focusing on the construction of transportation infrastructure. Considering the delay in the issuance of special bonds, local infrastructure projects are expected to be launched one after another. In this context, the expectation of steady growth has been strengthened, the development of infrastructure has been steadily promoted, and the large infrastructure sector is expected to benefit first. According to statistics, as of the time of press release, the scale of local bonds issued by various regions during the year was 772.619 billion yuan, an increase of 354.559 billion yuan over the same period last year, an increase of 84.79% year-on-year. Citic Securities Company Limited(600030) said that it is expected that the issuance of new special bonds in the first quarter of this year will be more than one trillion yuan. Considering the balance of special bonds last year and the constraints of urban investment and financing, it is expected that the growth rate of infrastructure investment in the first half of this year will be more than 5%, and it is expected to reach 10% under optimistic circumstances.
According to the analysis of Minsheng securities, the future increment of infrastructure investment will appear in the fields of intercity railway, urban rail transit and cold chain logistics. The investment driven by 2022 will be 220 billion yuan, 699.5 billion yuan and 86.6 billion yuan respectively. The pulling effect of new infrastructure on upstream and downstream and related industrial chains is more significant. According to the estimation of relevant research institutions, the investment in new infrastructure will continue to expand in the future, the investment growth rate will reach double digits, and the proportion in infrastructure investment will gradually increase to about 15% to 20%. Western Securities Co.Ltd(002673) also said that the scale of the new infrastructure will be further expanded to 1.18 trillion yuan to 1.19 trillion yuan in 2022, driving the year-on-year growth rate of infrastructure by about 0.16 to 0.23 percentage points. In terms of investment scale, 5g will have a scale of about 170 billion yuan to 180 billion yuan, intercity high-speed rail will be at least 140 billion yuan and UHV will be 60 billion yuan.
In terms of specific areas, many infrastructure areas such as new power system, digital infrastructure and power station operation have attracted wide attention from institutions. Gf Securities Co.Ltd(000776) it is suggested to pay attention to four main lines: building transformation, undervalued infrastructure, building leasing and steel structure. Citic Securities Company Limited(600030) said that under the tone of stable growth, infrastructure investment is expected to underpin the economy. Taking into account the supervision of special debt and local government implicit debt, it is expected to achieve a growth rate of 6.5% throughout the year, and infrastructure REITs is expected to become a potential source of incremental infrastructure funds. The infrastructure industry chain may usher in extreme changes in the basic area. It is recommended to select infrastructure industry chain companies such as cement, construction, new power system, digital infrastructure and power station operation that benefit from the expected warming of infrastructure development. Jiang Hao also said that he is optimistic about the investment opportunities in the field of digital infrastructure and the high growth of charging piles of new energy vehicles in the future.
