From the performance of past years, the overall performance of the construction sector before the two sessions is good
From the market of 17-21 years, the construction index showed a good increase before the two sessions. Except for a large correction in 2020, the construction sector increased better before the two sessions in other years. Since February 22, the sentiment of steady growth has heated up, and the construction sector has performed well. It has fluctuated in recent days. We believe that we expect it to be mainly related to the fluctuation of capital level and the fulfillment of policies near the two sessions.
One month after the two sessions, the construction sector can obtain excess returns except 2020. The degree of excess returns may be more related to the macro credit environment and fundamental trends. The market is expected to continue in 2022
In 17-21, within one month after the government work report of the two sessions, except 2020, the construction index has a certain excess return relative to Shanghai and Shenzhen 300 in other years. We judge that the construction in 2020 failed to achieve excess return and deviated from the increase of the market. The main reason is that the two sessions did not express the economic growth target and the countercyclical regulation demand of infrastructure as expected. Looking forward to 2022, we expect that the construction sector is still expected to achieve better performance after the two sessions. At present, the downward pressure on the economy is increasing. The central economic work conference in the 21st year proposed to carry out infrastructure investment moderately in advance. We expect that expanding effective investment will become the focus of the government's work goal this year. Since the beginning of the year, investment project commencement ceremonies have been held in many places across the country, We judge that the commencement and work rate of major projects in 22 years are better than that in the same period of 21 years. From the micro data, the current infrastructure fundamentals are actually better than expected, and the growth rate of infrastructure orders in mid January exceeded 68%.
Steady growth after the two sessions may still be one of the main lines, and BIPV, Bim and new materials deserve attention
In the first month after the two sessions in the period from 17 to 21, the regularity of income ranking of sub sectors is not strong. The overall performance of steel structure is good from 2020 to 2021, the performance of garden sector is good from 17 to 18, and the performance of design consultation is good from 18 to 20. On the whole, it does not show obvious regularity. The performance of sub sectors may have a great correlation with the policy environment and fundamentals at that time. We expect that the steady growth in 22 years may still be one of the core lines of the policy. At the same time, with the continuous development of the policy, the bottom recovery of the growth index of physical volume is expected to gradually appear. 22 years is a key year for the realization of construction transformation. We are firmly optimistic about the contribution of BIPV, pumped storage, new materials, Bim and other new directions to the business model and business increment of the industry, After the two sessions, we can pay attention to infrastructure, real estate and "construction + transformation" chain varieties.
Market Review
Last week, the construction (CITIC) index fell by 6.50%, the Shanghai and Shenzhen 300 index fell by 1.70%, and all the three sub sectors fell. We expect that it is mainly related to the fluctuation of capital level and the realization of the policies of the two sessions. Among individual stocks, Ningbo Construction Co.Ltd(601789) (+ 31.79%), Shenzhen Cheng Chung Design Co.Ltd(002811) (+ 20.87%), Qingdao East Steel Tower Stock Co.Ltd(002545) (+ 15.08%), Cofco Engineering & Technology Co.Ltd(301058) (+ 14.71%), Shanghaichengdiconstructioncorporationltd(603887) (+ 10.60%) led the increase.
Investment advice
Under the medium and long-term growth dimension of "construction +" leader, enterprises with "new energy" and "chemical" industries have gradually entered the performance cashing period, and their performance is expected to grow high. Under the dimension of valuation restoration of value varieties, the leaders of local state-owned enterprises are expected to enjoy the high boom of regional infrastructure. The profit elasticity brought by the improvement of operating efficiency has initially appeared. There are both opportunities for steady growth and report quality improvement in the medium and long term. The increase of market share of central enterprises supports the continuous growth of revenue. After the completion of leverage reduction, roe still has obvious upward elasticity, With the continuous strengthening of the profit release ability and willingness of central enterprises, they also have strong elasticity of valuation repair.
Risk tips: Infrastructure & real estate investment went down more than expected, new energy & chemical business expansion was less than expected, the concentration of assembled leaders was less than expected, and the progress of efficiency improvement in the reform of central enterprises and state-owned enterprises was less than expected.
