[core view of this week] recently, the market’s expectation of infrastructure acceleration continues to rise. In the first half of next year, real estate investment or “toughness is difficult” and export growth may be weak under a high base. Infrastructure acceleration, as an important tool for counter cyclical regulation, has the necessity and objective conditions. The intensive issuance of special bond funds at the end of this year and the early approval of special bond funds next year are expected to form a joint force to promote the improvement of infrastructure investment in the first half of next year. The construction sector is expected to meet the momentum of valuation improvement, focusing on three directions: 1) new power system construction: this week, the Energy Bureau released seven key tasks for next year, with high efficiency of power infrastructure investment and high current demand, It is expected to become the focus of steady growth, Focus on recommending and paying attention to Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) (22pe12x), China Energy Engineering Corporation Limited(601868) (22pe13x), private distribution network EPCO leader Suwen Electric Energy Technology Co.Ltd(300982) (22pe26x), enterprise energy efficiency control expert Acrel Co.Ltd(300286) (22pe32x); 2) undervalued infrastructure blue chip: at present, the overall valuation of central infrastructure enterprises is at the lowest range in history, and the expected improvement of infrastructure is expected to promote the valuation repair. It is recommended and focused on China Communications Construction Company Limited(601800) (22pe5.8x), China Railway Group Limited(601390) (22pe4.5x), China Railway Construction Corporation Limited(601186) (22pe3.7x); 3) affordable housing construction: affordable housing is expected to become one of the important starting points for common prosperity and steady growth next year, with emphasis on Shenzhen Capol International&Associatesco.Ltd(002949) (Shenzhen plans to promote BIM, and the company’s Bim and affordable housing business meet the growth momentum, 22pe11x), Shanghai Construction Group Co.Ltd(600170) (Longtou, 22pe8x, affordable housing construction in Shanghai), China State Construction Engineering Corporation Limited(601668) (China’s low-income housing construction leader, 22PE3.8X). Besides, it also recommends China National Chemical Engineering Co.Ltd(601117) (Ji Erjing, aerogel project will soon be put into operation, new material platform for chemical industry will start sailing, 22PE11X), and building carbon neutral Runa Smart Equipment Co.Ltd(301129) (heating energy saving system expert, dual carbon assistance growth, 22PE28X), Dongzhu Ecological Environment Protection Co.Ltd(603359) (active layout forestry carbon sink, 22PE12X).
In the first half of next year, the expected increase in infrastructure acceleration will promote the repair of plate valuation. In the first half of next year, real estate investment or “toughness is difficult”, and the growth of exports may be weak under the high base. As an important tool for counter cyclical regulation, the need for infrastructure strengthening has increased. There are objective conditions for infrastructure strengthening: 1) after the intensive issuance of special bonds in the second half of this year, a considerable part will be used in Q1 next year. At the same time, the amount of 1.46 trillion special bonds approved in advance in 2022 has also been issued. The superposition effect of two-year special bond funds will provide strong support for expanding effective investment next year; 2) In November, the national development and Reform Commission approved 14 fixed asset investment projects, with a total investment of 261.5 billion yuan, accounting for 34.5% of the total investment of all approved projects in the first 11 months of this year. Project approval has been significantly accelerated, which is expected to accelerate the formation of physical workload; 3) In the recent central economic work conference, the implicit liabilities are expressed as “the risk is steadily mitigated and the risk is generally controllable”, indicating that the resolution of implicit liabilities has achieved phased results. We expect that the follow-up supervision will control the increase, but we may pay more attention to steadily promoting the prevention and disposal of risks derived from disposal, and the pace of elimination may be adjusted. Therefore, in the first half of next year, when the word “stable” is in the forefront, the finance is expected to ensure the expenditure intensity, accelerate the expenditure progress, promote the improvement of infrastructure investment, meet the momentum of valuation improvement in the construction sector, and continue to recommend three directions of “stable growth”: 1) new power system construction: this week, the Energy Bureau released seven key tasks for next year to continue to promote wind power, photovoltaic, hydropower Nuclear power and other renewable energy, as well as the construction of pumped storage, new energy storage, source network load storage coordination and other power regulation systems. The investment efficiency of power infrastructure is high and the current demand is large, which is expected to become the key force direction of steady growth. It is expected to recommend and pay attention to the green power construction and operation of central enterprise leaders Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) ; Private distribution network EPCO leader Suwen Electric Energy Technology Co.Ltd(300982) and enterprise energy efficiency control expert Acrel Co.Ltd(300286) ; 2) Undervalued infrastructure blue chip: at present, the overall valuation of central infrastructure enterprises is at the lowest range in history, and the expected improvement of infrastructure is expected to promote valuation repair. It is recommended and focused on China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) . 2) Affordable housing construction: the central economic work conference focuses on promoting the construction of affordable housing. Affordable housing is one of the important starting points for common prosperity and steady growth next year, and is expected to accelerate its development. It focuses on the leader in affordable housing design in South China Shenzhen Capol International&Associatesco.Ltd(002949) , the leader in affordable housing construction in Shanghai Shanghai Construction Group Co.Ltd(600170) , and the leader in affordable housing construction in China China State Construction Engineering Corporation Limited(601668) .
China National Chemical Engineering Co.Ltd(601117) : Adiponectin and aerogel projects will start soon, and the new material platform for chemical industry is ready to start. According to the information disclosure of investor interaction platform of the company exchange, the adiponectin project and aerogel two new material projects invested by the company are progressing smoothly. As of December 13, the overall construction progress of adiponitrile project has been completed by about 96%. The comprehensive pump house, general substation, air separation, circulating water station, demineralized water station, liquid ammonia tank farm, substation in front of the plant, utility substation and sewage substation of the project have been handed over. The core parts of hydrocyanic acid unit, adiponitrile unit, hydrogenation Nylon 66 unit is planned to be delivered before December 30. If it is completed as planned, the adiponitrile project is expected to be put into operation at the beginning of January next year. As it takes some time for reaction and capacity climbing, we expect that the intermediate product acrylonitrile will be output at the end of January and adiponitrile will be output from February to March. The aerogel project public assistance device has been started in December 10, 2021, and the single 25 thousand party production line has been well connected. If the two projects are successfully produced and reach production capacity, it will fully confirm the strength of the company in the R & D, production and operation of new chemical materials. We estimate that the company’s new chemical materials project is expected to achieve an income of 12.1 billion yuan next year, The net profit attributable to the parent company is RMB 1.68 billion (see the in-depth report issued on August 23 for details). The new chemical materials business is expected to achieve a qualitative breakthrough, promote the rapid growth of performance and open the “technology + industry” The second growth curve. According to the announcement, the company still has many new materials and new energy technology reserves, and the test continues to make progress, such as the recent commissioning of the company’s Beijing Fangshan high-temperature waste gasification hydrogen oil and hydrogen energy industry demonstration project; One trial run of UHMWPE industrial application test was successful. In addition, the annual report disclosed that a number of small-scale test projects such as Poe, nylon 12, carbon black recycling and environmental protection catalyst have achieved expected results; Pilot projects such as municipal waste gasification, PBS key monomer succinic acid and high-temperature gasification of solid waste have been steadily promoted, and the follow-up is expected to be gradually industrialized, with great potential to build a platform for new chemical materials. We expect that the company’s net profit attributable to the parent company will be 4.2/64/8.2 billion yuan in 21-23 years, with a year-on-year increase of 15% / 54% / 27%, EPS of 0.69/1.06/1.34 yuan respectively, and the corresponding PE of the current stock price is 18 / 12 / 9 times respectively.
Runa Smart Equipment Co.Ltd(301129) : expert of heating energy saving system, double carbon helps accelerate growth. Recently, we issued the company’s in-depth coverage report. The company is a leading enterprise in the integration of “hardware + software + service” for heating and energy conservation, with prominent industry position and rich customer resources. In recent years, the company as a whole has shown a rapid growth trend, with a compound increase of 37% / 63% in revenue and performance in recent three years; In 2020, the gross profit margin / net profit margin / roe are 56% / 31% / 39% respectively, with outstanding profitability; The cash flow and net profit are highly matched, the profit quality is high, and the business model is excellent. In terms of industry, under the background of dual carbon and dual control, the investment in heat sources such as thermal power plants and boiler houses in China tends to shrink, while the heating area continues to grow, and the supply and demand are facing imbalance. The heating energy-saving industry to improve efficiency is expected to enter a golden development period. We estimate that China’s heating energy-saving facilities market is expected to exceed 20 billion yuan in 2025, and the five-year compound growth rate is expected to reach 25%. At present, the industry concentration is low. Under the background that heating companies continue to pay attention to heating efficiency, the leading market share with excellent product performance and intelligent heating solutions is expected to continue to increase. In terms of competitive advantage, the company’s system products cover the core heating links such as heat source, heat network, heat station and heat users, which can meet the needs of customers for differentiated and customized products. It is one of the few integrated production and development enterprises of heating management system in China. In terms of hardware, from the comparison of public data, the company’s core products such as ultrasonic heat meter and intelligent heat exchange unit have stronger performance than their peers. In terms of software, the intelligent heating software platform developed by the company based on long-term project data accumulation can reduce building heat consumption and carbon emission by 20% – 30% and power consumption by 30% – 60% on the premise of improving heating support capacity, with outstanding performance advantages. Sufficient growth momentum in the future: 1) regional development: while deeply cultivating Shandong, the province with the largest demand for heating, the company vigorously develops regional markets such as Xinjiang, Shanxi, Shaanxi and Henan. 2) New products: the company actively carries out the application of AI algorithm in the field of heating, and AI system products have begun to be promoted. 3) Capacity expansion: it is planned to build 600 sets / year intelligent modular heat exchange units and 20000 sets / year intelligent hydraulic balancing devices, and the capacity is expected to double, significantly enhancing the company’s capacity. We predict that from 2021 to 2023, the company’s net profit attributable to the parent company will be RMB 170 / 240 / 320 million respectively, with a year-on-year increase of 29% / 41% / 36% (CAGR in 2020-2023 is 35%), and the corresponding PE of the current stock price is 39 / 28 / 20 times respectively.
Shenzhen plans to vigorously promote Bim and Shenzhen Capol International&Associatesco.Ltd(002949) is expected to benefit from it. According to Shenzhen business daily, This week, Shenzhen issued the implementation opinions on accelerating the application of building information model (BIM) technology (Trial) Meanwhile, relevant persons from Shenzhen Municipal Bureau of housing and urban rural development said that Shenzhen will take the lead in carrying out the comprehensive and in-depth application of BIM Technology in 19 key areas such as Qianhai and Houhai, and the BIM application market in the city is expected to expand significantly: 1) if only looking at major projects, there will be 596 major projects in Shenzhen in 2021, with an annual planned investment of 229.1 billion yuan, According to the calculation that BIM application (including design, construction, operation and maintenance, etc.) accounts for 5% of the total investment, the BIM application market scale of major projects in the city is about 10 billion every year; 2) if BIM application is fully promoted in Shenzhen, calculated by the fixed investment of 800 billion a year in Shenzhen, the corresponding BIM application market scale in the city can reach 40 billion a year (including housing construction BIM of about 15 billion). Shenzhen Capol International&Associatesco.Ltd(002949) As one of the earliest design enterprises in China to start BIM R & D, Huayang ibim V3 has been launched after 13 years of development 0 system platform, which can realize rich functions such as rapid design modeling, automatic cost generation, digital construction management and so on. At present, the company has more than 150 full-time BIM R & D teams, and has completed BIM forward design projects with a total construction area of more than 8 million m2. This year, more than 2000 designers use their BIM software online, and more than 1 million people use Huayang express construction orders. Huayang platform has a total of more than 2000 standard families, which can meet the BIM forward design needs of different building types at this stage. At present, Shenzhen accounts for a relatively high proportion of the company’s revenue. As a leading enterprise in BIM design of housing construction in South China, it is expected to fully benefit from the rapid increase of BIM demand in Shenzhen. At the same time, the company is also a leading enterprise in affordable housing design with rich project experience. In 2020, the design revenue related to affordable housing will be about 200-400 million yuan, accounting for 10% – 20% of the total revenue. It is expected to benefit from the acceleration of affordable housing construction in China in the future. We predict that from 2022 to 2023, the company will realize a net profit attributable to the parent company of RMB 280 / 350 million respectively, and the current share price corresponds to 11 / 9 times of PE.
Investment suggestion: next year, the real estate investment is under great pressure and the export growth may be weak under the high base. As an important tool for counter cyclical regulation, the necessity of infrastructure strengthening is enhanced, and the active financial development is expected to support the infrastructure improvement in the first half of next year. The construction sector is expected to meet the power of valuation improvement, focusing on three directions: 1) new power system: high investment efficiency It is in great demand and is expected to become a key force direction. It is recommended that Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) , Suwen Electric Energy Technology Co.Ltd(300982) , Acrel Co.Ltd(300286) ; 2) Undervalued infrastructure blue chips: key recommendations China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) ; 3) Affordable housing: it is expected to become one of the important starting points for common prosperity and steady growth next year, with emphasis on Shenzhen Capol International&Associatesco.Ltd(002949) , Shanghai Construction Group Co.Ltd(600170) , China State Construction Engineering Corporation Limited(601668) . In addition, we recommend the China National Chemical Engineering Co.Ltd(601117) of adiponectin and aerogel, and the Runa Smart Equipment Co.Ltd(301129) and Dongzhu Ecological Environment Protection Co.Ltd(603359) of building carbon neutral.
Risk tips: policy promotion is less than expected, epidemic impact is more than expected, accounts receivable risk, overseas operation risk, etc.
