Core view:
The landscape of the construction industry has improved significantly. In February 2022, the PMI index of construction industry was 57.6%, with a year-on-year increase of 2.9pct and a month on month increase of 2.2pct. Among them, the business activity index of civil engineering construction industry was 58.6%, an increase of 8.9pct month on month, and the prosperity level of construction industry increased significantly. The index of newly signed orders and the expected index of business activities were 55.1% and 66% respectively, both higher than last month. Among them, the expected index of business activities has operated in the high boom range for two consecutive months. Driven by the accelerated promotion of stable investment in the near future and the moderately advanced development of some major infrastructure projects and projects, the boom of the construction industry has continued to improve.
The issuance of special bonds was accelerated, and the source of capital for infrastructure investment was guaranteed. In January this year, local governments have organized the issuance of 484.4 billion yuan of new special bonds, accounting for 33.2% of the amount issued in advance. From January to March 2020, a total of 26.4 billion yuan of new special bonds were added. The issuance speed of special bonds has been significantly accelerated this year. Among them, about 30% is used for infrastructure construction of municipal and industrial parks, 20% for transportation infrastructure construction, 20% for social undertakings such as education, health and elderly care, and 30% for other aspects. As an important tool of active finance, special debt plays an increasingly important role, its issuance progress is accelerated, and the capital source of infrastructure investment is guaranteed.
The construction of affordable housing was supported by policies. In 2021, 40 cities across the country raised 942000 new affordable rental housing units. In 2022, focusing on cities with net population inflow, 2.4 million affordable rental housing units (rooms) were raised throughout the year. The construction of affordable housing is expected to accelerate. The Ministry of housing and leasing issued the guidance of the China Banking Regulatory Commission on the sustainable development of housing security and leasing business, and put forward joint support to the Ministry of housing construction and leasing of the people's Republic of China on the sustainable development of housing security and leasing business.
The industry concentration has increased, and the performance and valuation are expected to continue to rise. The development of the construction industry has entered a stable period. The market share of newly signed orders of the eight central construction enterprises increased from 24.38% in 2013 to 39.44% in the first three quarters of 2021. The concentration of the construction industry is expected to continue to improve. The construction index PE is 10.86 times, the 10-year historical quantile is 39.19%, and the safety margin is high. It is suggested to pay attention to investment opportunities in infrastructure, assembly building, green building, carbon neutralization and other fields. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\8 ( China State Construction Engineering Corporation Limited(601668) . SH), Shandong Hi-Speed Road&Bridge Co.Ltd(000498) ( Shandong Hi-Speed Road&Bridge Co.Ltd(000498) . SZ), etc. It is suggested to pay attention to Anhui Honglu Steel Construction(Group) Co.Ltd(002541) ( Anhui Honglu Steel Construction(Group) Co.Ltd(002541) . SZ), Shanghai Construction Group Co.Ltd(600170) ( Shanghai Construction Group Co.Ltd(600170) . SH), Shanghai Tunnel Engineering Co.Ltd(600820) ( Shanghai Tunnel Engineering Co.Ltd(600820) . SH), Sinosteel Engineering & Technology Co.Ltd(000928) ( Sinosteel Engineering & Technology Co.Ltd(000928) . SZ), Sichuan Road & Bridge Co.Ltd(600039) ( Sichuan Road & Bridge Co.Ltd(600039) . SH), etc.
Risk warning: the risk of decline in fixed asset investment; The risk that the recovery of accounts receivable is less than expected; Risk of new orders falling short of expectations.
