The construction sector fell this week, underperforming the overall market. In October, infrastructure investment fell, real estate investment fell slightly, construction and completion fell year-on-year, and real estate sales also fell year-on-year. Pay attention to relevant statements on infrastructure and real estate in the central economic work conference.
The overall decline in construction underperformed the market, with more gains and less losses in segments: this week, Shenwan construction index closed at 2166.5 points, down 0.7% month on week, underperforming the market. The industry’s average price to book ratio was 0.9 times, which was basically flat compared with last week. Segments rose more or fell less, with industrial construction rising by 3.4%, the largest increase; The garden sector fell 1.3%, the largest decline.
Pay attention to the relevant statements of the central economic work conference on infrastructure and real estate: from December 8 to 10, the central economic work conference was held in Beijing. The meeting put forward the overall requirements of “stability first and seeking progress in stability” for the economic work in 2022, requiring that the policy force should be appropriately advanced, ensure the intensity of fiscal expenditure, accelerate the progress of expenditure, and moderately advance infrastructure investment. In addition, the meeting also required to continue to deepen the supply side structural reform, break through the supply constraint blocking point, and open up all links of production, distribution, circulation and consumption. In terms of real estate, the meeting requested that we should continue to adhere to the positioning of “housing without speculation”, adhere to the simultaneous development of rental and purchase, accelerate the development of long-term rental housing market and affordable housing construction, support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the virtuous circle and healthy development of the real estate industry due to urban policies. It is expected that the real estate industry will still maintain stable development in 2022, infrastructure investment may increase significantly year-on-year, and the issuance scale of special bonds will also increase.
Infrastructure investment fell year-on-year, while real estate investment fell slightly: in October, fixed asset investment was 7.1 trillion, a decrease of 2.4%, of which the completed investment in infrastructure and real estate development was 1.8 trillion and 1.2 trillion respectively, with a year-on-year growth rate of – 4.8% and – 5.4% respectively. In October, real estate and infrastructure investment continued to decline year-on-year, and the year-on-year decline of real estate investment expanded compared with September. In infrastructure construction, the investment in power, transportation and public utilities was 0.34 trillion yuan, 0.73 trillion yuan and 0.74 trillion yuan respectively. The investment in electricity and public utilities declined year-on-year and decreased slightly, while the investment in transportation increased steadily year-on-year, with a month on month increase of 12.9%. Since June 2021, Hainan, Zhejiang, Ningxia, Inner Mongolia and other places have issued the comprehensive transportation plan for the 14th five year plan, which is expected to drive the transportation investment to continue to increase.
Both commencement and completion fell year-on-year, and real estate sales fell year-on-year: in October, the planned land construction area of 100 large and medium-sized cities totaled 70 million square meters, with a decrease of 46.7%, and the average transaction floor price was 4023 yuan / square meter. The construction, completion and sales areas were 140 million square meters, 60 million square meters and 130 million square meters respectively, with a year-on-year growth rate of – 33.1%, – 20.6% and – 21.7% respectively. In October, the land transaction area decreased significantly year-on-year. The new construction data decreased significantly compared with the same period last year. The completion data decreased year-on-year after the rapid growth from May to September, but increased significantly month on month. Recently, many departments have released signals of loose real estate policies, emphasizing “stabilizing land prices, house prices and expectations”. It is expected that the sales area and sales unit price of commercial housing will stabilize for a long time.
Key recommendation
It is recommended to focus on the leader Shenzhen Capol International&Associatesco.Ltd(002949) of prefabricated architectural design, and it is recommended to pay attention to the leaders of steel structure and industrial construction sector whose demand is expected to increase under the recovery of manufacturing investment: Zhejiang Southeast Space Frame Co.Ltd(002135) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , China National Chemical Engineering Co.Ltd(601117) , Jangho Group Co.Ltd(601886)
Main risks of rating
Risk tip: manufacturing investment slowed down, the promotion of prefabricated buildings was less than expected, and macro liquidity tightened.
