The construction sector made a sharp correction this week. Affected by the international situation and the intensification of the epidemic in Hong Kong, the expectation of stable macroeconomic growth was questioned. The State Information Office held a press conference to promote the high-quality development of housing and urban and rural construction. The Ministry of transport requested to actively expand effective investment in transportation.
The construction sector made a sharp correction, and the sub sectors generally fell: this week, the Shenwan construction index closed at 2268.8 points, down 6.5% from last week. Segments generally fell, with civil construction falling the most, down 8.2%. Affected by the rise of covid-19 confirmed cases in China caused by the conflict between Russia and Ukraine and the intensification of the epidemic in Hong Kong, the expectation of stable macroeconomic growth was questioned. We believe that the commencement data in March will verify the strength of steady growth, callback or better buying time point.
At the press conference of the State Council Information Office, steady growth and promoting reform remain the main tone; The Ministry of transport requires active planning to expand effective investment in transportation: on February 24, the State Information Office held a press conference to promote high-quality development of housing and urban and rural construction. In 2022, the Ministry of housing and urban rural development will promote good work from the following aspects: first, maintain the stable operation of the real estate market; Second, promote the structural reform of housing supply side; Third, promote the transformation of old urban communities; Fourth, promote major projects of aging, renewal and transformation of urban pipelines such as gas; Fifth, vigorously promote “new urban construction”. In terms of real estate, in 2022, we should continue to unswervingly adhere to the positioning of “no speculation in real estate, do not use real estate as a tool and means to stimulate the economy in the short term, strengthen the expected guidance, and implement policies for the city to promote the virtuous cycle and healthy development of the real estate industry. On February 24, the spokesman of the Ministry of transport said that in 2022, the Ministry of transport will actively plan to expand effective investment in transportation. The key points are as follows: 1. Issue policy guidance documents; 2. Pay close attention to the implementation of the 14th five year plan; 3. Plan and promote the construction of a number of major transportation projects; 4. Ensure the land fund and other policy elements.
Infrastructure investment rebounded year-on-year, and real estate investment continued to decline year-on-year: in December, fixed asset investment was 7.0 trillion, an increase of 2.0%, of which the completed investment in infrastructure and real estate development was 1.9 trillion and 1.0 trillion respectively, with a year-on-year growth rate of 3.8% and – 13.9% respectively. Compared with November, infrastructure investment picked up in December, and real estate investment fell further. In infrastructure construction, the investment in power, transportation and public utilities was 0.42 trillion yuan, 0.59 trillion yuan and 0.88 trillion yuan respectively, with a year-on-year growth rate of 8.1%, 7.1% and – 0.3% respectively. The year-on-year growth of electric power and transportation is relatively large, and the year-on-year decline of public water conservancy investment is also significantly reduced compared with November. The central economic work conference in 2021 called for “accelerating the preliminary work and construction progress of major water conservancy projects” and the recent release of the comprehensive transportation plan for the 14th five year plan in many regions. The total investment has been significantly increased compared with the 13th five year plan. It is expected that there will be a large development space for transportation, water conservancy and other subdivisions in 2022.
Construction continued to decline, completion increased year-on-year, and the land transaction area decreased significantly year-on-year: in December, the planned land transaction area in 100 large and medium-sized cities totaled 150 million square meters, with a decrease of 55.8%, and the average transaction floor price was 3138 yuan / square meter. The construction, completion and sales areas were 160, 330 and 210 million square meters respectively, with year-on-year growth rates of – 31.2%, 1.9% and – 15.6% respectively. In December, the land transaction and supply area decreased significantly, the average transaction floor price increased, and the unit price of listed floor decreased; The new construction data decreased compared with the same period last year, and the completion data increased year-on-year. Due to the demand for payment collection of real estate enterprises at the end of the year, the completion data performed well and the new construction data was slightly weak. However, with the development of infrastructure investment and the signs of marginal policy easing in the real estate industry, we believe that the new construction data may improve.
Key recommendation
Key recommendation: infrastructure sector, Shenzhen Capol International&Associatesco.Ltd(002949)
Main risks of rating
Risk tip: manufacturing investment slows down, assembly promotion is less than expected, and macro liquidity is tightened.
