Industry dynamics
Industry status
In January, the National Bureau of statistics did not disclose the fixed asset investment data. We updated the relevant operating data of the construction industry as follows.
Commentary
Orders: the growth rate of construction and infrastructure orders continued to rise in December. The new orders of the four sample construction enterprises we tracked in 2021 increased by 13.7% year-on-year and 3.7 ppt month on month; In December, the growth rate was 41.8% year-on-year, 35.0 ppt month on month, and the growth rate increased significantly; Among them, the monthly housing construction orders in December increased by 74.9% year-on-year and 65.6ppt month on month. Driven by the low base and the demand for non commercial housing, they achieved high growth. The monthly infrastructure orders in December increased by 32.3% year-on-year and 21.6ppt month on month. The growth rate has continued to improve since August 21. We believe that the steady growth of infrastructure in the first half of this year has sufficient project support. On the one hand, the launch of new projects is expected to drive investment, while the implementation progress of projects under construction is also expected to accelerate, jointly driving the growth of infrastructure investment in the first half of this year.
Capital: in January, the net financing of special bonds was 480.2 billion yuan, and the medium and long-term corporate loans resumed positive growth. In January, the national general debt and special debt raised 77.4 billion yuan and 480.2 billion yuan respectively. According to our statistics, in January, 232.7 billion yuan of special bonds have been issued to invest in the field of infrastructure, accounting for 48%, higher than 43% in 2021 and slightly lower than 49% in 2020. We believe that 1q22 special bonds are expected to continue the rapid issuance rhythm, so as to support the investment in new infrastructure projects. In January, the net financing of urban investment bonds was 302 billion yuan, a year-on-year decrease of 18.6%. In January, social finance increased by 6.17 trillion yuan, higher than market expectations, including 2.1 trillion yuan of medium and long-term corporate loans, with a year-on-year increase of 2.9%, ending the year-on-year decrease trend in a single month since July 2021 and returning to positive growth.
PMI data showed that orders picked up and profit margins continued to improve. In January, the PMI new order index and business activity index of the construction industry were 53.3% and 55.4% respectively, with a month on month increase of 3.3ppt and a decrease of 0.9ppt respectively In January, the difference between the PMI sales price index and the input price index of the construction industry was 10.4% year-on-year, which continued to expand, reflecting the improvement of the profit margin index of construction enterprises. In January, the sales volume of heavy trucks and excavators decreased by 59% and 48% year-on-year.
Valuation and recommendations
The company’s profit forecast, target price and rating remain unchanged. We believe that the growth peak of infrastructure investment is expected to appear at the end of 1q and the beginning of 2q. It is suggested to continue to pay attention to the stock price performance of infrastructure leaders and infrastructure central enterprises, pay attention to China Communications Construction Company Limited(601800) – A / h and other construction central enterprises, be optimistic about China State Construction Engineering Corporation Limited(601668) international-h, Shenzhen Capol International&Associatesco.Ltd(002949) benefiting from the construction of Guangdong, Hong Kong, Macao and the construction of affordable housing in the mainland, and pay attention to the investment opportunities of Anhui Honglu Steel Construction(Group) Co.Ltd(002541) and other steel structure leaders Building vibration reduction and isolation faucet Quakesafe Technologies Co.Ltd(300767) .
Risk
The implementation of the “steady growth” policy was less than expected, and the epidemic situation in China was repeated.
