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Macro background: at present, consumption and real estate demand are weak, and infrastructure has become an important starting point for steady growth. Since the beginning of 2022, China's economic growth has been under great pressure, and the demand for real estate is still weak. From January to February, the sales area of Kerui top 100 real estate enterprises decreased by more than 40% year-on-year. China's epidemic has repeatedly dragged down the recovery of consumption. In this context, infrastructure investment with strong countercyclical attribute will become an important starting point for steady growth and expanding domestic demand. The central conference and the national development and Reform Commission have repeatedly stressed the need to "moderately advance infrastructure investment"; At the same time, the post fiscal position in 2021 and the pre fiscal position in 2022 provide more financial support for infrastructure investment in advance. During the period from November 2021 to January 2022, the issuance of new special bonds increased by 1.1 trillion yuan year-on-year. The "two sessions" will be held soon, and more policy deployment of overweight infrastructure is worth looking forward to.
Industrial boom: policy increase the layout and overall planning of new and old infrastructure. From the perspective of policy tone, in the process of coordinating steady growth and high-quality development, both traditional infrastructure and new infrastructure will usher in an overweight layout. From the perspective of industrial data, at present, the traditional infrastructure construction still needs to be strengthened, and the annual demand for new infrastructure is relatively strong. Specifically: first, a series of high-frequency indicators such as asphalt crude oil ratio, cement price and year-on-year operation time of excavators are hovering at a low level, which is not only affected by winter and Spring Festival holidays, but also dragged down by another major terminal demand and the downturn of the real estate industry; Second, the demand for new energy installed capacity has maintained rapid growth. It is expected that the new installed capacity of wind power and photovoltaic will increase by 36% and 50% year-on-year respectively in 2022; Third, the electrification of energy consumption drives the continuous increase of power demand for a long time. The reform of pricing mechanism helps the moderate rise of electricity price, and the performance of power suppliers is expected to benefit. Since July 2021, all provinces have successively adjusted the time-sharing pricing mechanism, and the peak electricity price has risen by about 50% on average on the basis of flat electricity price; Fourth, the new information infrastructure is expected to maintain the investment peak in 2022. The official launch of the "counting from the east to the west" project and the recovery of the growth rate of capital expenditure of downstream Internet cloud service providers are expected to accelerate the construction of upstream data centers. Alibaba's capital expenditure rose to 90% year-on-year in the fourth quarter of 2021.
Market valuation: the valuation of builders is relatively low, and the valuation of new growth infrastructure fell back to near the center. Specifically: first, the valuation of enterprises related to power infrastructure and operation is relatively not low. The PE valuation of Shenwan power industry is 28.4x, which is in the historical quantile of more than 90% (nearly ten years, the same below), and the Pb valuation is 1.9x The PE valuation of Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) is 14x and 19x respectively, which is in the historical quantile of 60% - 70%. Second, the valuation of the new energy sector fell back to near the historical center. The PE valuation of Shenwan photovoltaic equipment and wind power equipment industry were 53x and 28x respectively, in the historical 50% - 60% quantile; The PE valuation of CITIC energy storage industry index is 85x, which is about 40% of the historical quantile. Third, the valuation of the concept of new information infrastructure is relatively low. The PE valuation of the communication equipment industry and the concept of wind computing from east to west is near the historical 20% - 30% quantile. Fourth, the valuation of building materials industry is relatively low. The PE valuation of building decoration and building materials industry is 11x and 14x respectively, which are near the historical 40% and 20% quantile respectively, China State Construction Engineering Corporation Limited(601668) , China Railway Construction Corporation Limited(601186) PE valuation is less than 5x, and China Communications Construction Company Limited(601800) pe valuation is about 8x.
Investment Outlook: it is suggested to pay attention to the three main lines of new power and energy infrastructure, new information infrastructure and construction sector. Based on the comprehensive judgment of industrial prosperity and valuation level, we suggest to focus on three main lines benefiting from infrastructure development: first, the main line of new power system construction, the business performance of power operation is expected to improve, and the profit growth of manufacturers of consumables and equipment related to new energy such as wind power, photovoltaic and energy storage is expected to further improve; Second, the main line of valuation and repair of Engineering builders, the increase of infrastructure orders, and more upward support for engineering construction enterprises with stable profitability; Third, the main line of new information infrastructure. The acceleration of data center construction is expected to open up the upward space for upstream equipment, software enterprises and midstream service providers.
Risk tip: the pace and intensity of policy promotion are lower than expected; The economic downturn exceeded expectations; The installation progress of new energy is less than expected; The pace of data center construction is less than expected; The epidemic spread more than expected.
