Weekly market of construction industry
The industry rose and fell in the week. This week (2.28-3.4), the building decoration industry (SW) rose by + 0.18%, which was stronger than the performance of Shanghai Composite Index (- 0.11%), Shanghai and Shenzhen 300 (- 1.68%) and Shenzhen Component Index (- 2.93%). The weekly increase ranked 11th among sw31 primary industries, and the industry ranking rose by 20 compared with last week (31st). In terms of molecular sector, housing construction (3.11%), basic municipal engineering (1.48%), other professional engineering (0.47%) and international engineering (0.27%) increased the most, while chemical engineering sector performed the weakest (- 4.37%).
Performance of individual stocks in a week. A total of 48 companies in the construction industry recorded an increase this week, accounting for 32.88%; The number of companies with an increase of more than the industry index (+ 0.18%) this week was 18, accounting for 12.33%. The construction industry recorded an increase this week. The number of companies increased compared with last week, and the number of companies with an increase of more than the industry index also increased compared with last week. The top 5 gainers of the industry are Daqian Ecology & Environment Group Co.Ltd(603955) (13.11%), Longjian Road&Bridge Co.Ltd(600853) (9.71%), Shenzhen Qixin Group Co.Ltd(002781) (9.54%), Beijing Jiayu Door Window And Curtain Wall Joint-Stock Co.Ltd(300117) (8.36%), Holsin Engineering Consulting Group Co.Ltd(603909) (8.34%); The top 5 industry declines this week were Shenzhen Capol International&Associatesco.Ltd(002949) (- 11.05%), Shenzhen Zhongzhuang Construction Group Co.Ltd(002822) (- 11.76%), Chengbang Eco-Environment Co.Ltd(603316) (- 13.32%), Hanjia Design Group Co.Ltd(300746) (- 13.77%), Shenzhen Cheng Chung Design Co.Ltd(002811) (- 16.12%).
Industry valuation. From the perspective of the overall P / E ratio of the industry, as of March 4, the P / E ratio (TTM) of the architectural decoration industry was 10.8 times and the industry P / B ratio (MRQ) was 0.99 times, basically unchanged from last week. Compared with the SW primary industry, PE in the construction industry ranks fourth from bottom, higher than steel, real estate and banking; Pb valuation ranks the third lowest in all primary industries, higher than real estate and banks. Current industry price earnings ratio (TTM) is the lowest, with top 5 Shaanxi Construction Engineering Group Corporation Limited(600248) (3.49), China Railway Construction Corporation Limited(601186) (4.32), China State Construction Engineering Corporation Limited(601668) (4.43), China Railway Group Limited(601390) (5.64), Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (6.12); The lowest price to book ratio (MRQ) is China Railway Construction Corporation Limited(601186) (0.55), Shenzhen Grandland Group Co.Ltd(002482) (0.64), Beijing Orient Landscape & Environment Co.Ltd(002310) (0.66), Misho Ecology & Landscape Co.Ltd(300495) (0.68), China Communications Construction Company Limited(601800) (0.70).
Industry dynamic analysis
The two sessions of the National People's Congress were held this week, and the expected GDP growth target was 5.5%. It was proposed to put steady growth in a more prominent position. It was once again clear that infrastructure investment should be carried out moderately in advance, and steady growth should continue to increase. The construction of infrastructure and housing construction should focus on water conservancy, transportation, energy, urban pipe network, urbanization and affordable housing. At the level of capital supply, fiscal expenditure should be expanded The central transfer payment has increased, the issuance of special bonds has accelerated, the policy support of the construction industry is still strong, and the market demand is expected to continue to release. At the micro level, some new orders signed by central enterprises in January achieved rapid growth. We continue to be optimistic about the growth rate of infrastructure investment in Q1 and the follow-up market performance of the construction industry. We continue to recommend the high-quality targets of infrastructure central enterprises and local infrastructure leading sectors, survey and design sectors, urban rail industry chain and new power construction as the main force of infrastructure, At the same time, the decoration and undervalued consumption of building materials related to the real estate chain are expected to usher in development opportunities in the future.
The 2022 government work report released on March 5 defines various construction objectives in 2022. We sort out the relevant contents of the construction industry as follows:
Infrastructure construction: actively expand effective investment, appropriately advance infrastructure investment around the major national strategic deployment and the 14th five year plan, build key water conservancy projects, comprehensive three-dimensional transportation network, important energy bases and facilities, accelerate the renewal and transformation of urban gas pipelines and other pipe networks, improve flood control and drainage facilities, and continue to promote the construction of underground comprehensive pipe corridors. The central government has allocated 640 billion yuan of investment in the central budget, and the government has made more investment in people's livelihood projects, increasing efforts to make up for weaknesses in the field of social and people's livelihood. Steadily promote the construction of urban agglomeration and metropolitan area, and promote the coordinated development of large, medium and small cities and small towns.
2 real estate: continue to ensure the housing needs of the masses, adhere to the positioning of housing without speculation, explore new development models, adhere to the simultaneous development of rental and purchase, accelerate the development of long-term rental housing market and promote the construction of indemnificatory housing.
3 fiscal policy: in terms of financial fund supply, active fiscal policy should improve efficiency and pay more attention to accuracy and sustainability. It is expected that fiscal revenue will continue to grow this year. In addition, specific state-owned financial institutions and franchised institutions will turn in the remaining profits in recent years according to law and transfer into the budget stability adjustment fund. The scale of expenditure will expand by more than 2 trillion yuan compared with last year, and the available financial resources will increase significantly. This year, the expenditure at the central level will increase by 3.9%, of which the expenditure of central departments will continue to grow negatively. Central to local transfer payments increased by about 1.5 trillion yuan, with a scale of nearly 9.8 trillion yuan, an increase of 18%, the largest increase in many years.
4 monetary policy: strengthen the implementation of prudent monetary policy. Give full play to the dual functions of monetary policy tools in terms of aggregate and structure, and provide stronger support for the real economy. Expand the scale of new loans and keep the growth rate of money supply and social financing basically matching the nominal economic growth.
5. Special bonds: it is proposed to arrange 3.65 trillion yuan of special bonds of local governments. We will strengthen performance orientation, adhere to "funds follow projects", reasonably expand the scope of use, support the follow-up financing of projects under construction, and start a number of qualified major projects, new infrastructure, transformation of old public facilities and other construction projects. Private investment accounts for the majority of investment. We should give full play to the role of leading major projects and leveraging government investment, improve relevant support policies, and fully mobilize the enthusiasm of private investment.
On March 1 this week, the National Bureau of statistics released the PMI data for February. In February, the PMI of China's manufacturing industry was 50.2%, an increase of 0.1 percentage points over the previous month, the PMI of non manufacturing industry was 51.6%, an increase of 0.5 percentage points over the previous month, higher than the critical point. The overall recovery pace of non manufacturing industry has accelerated. Among them, the business activity index of construction industry was 57.6%, an increase of 2.2 percentage points over the previous month, The prosperity index of the construction industry was 58.9% higher than that of the construction industry last month, which was significantly higher than that of the construction industry by 8.9%. In terms of sub items, the index of employees in the construction industry was 55.8%, an increase of 6.6 percentage points over the previous month; The new order index of the construction industry was 55.1%, up 1.8 percentage points from the previous month; The expected index of business activities of the construction industry was 66.0%, an increase of 1.6 percentage points over the previous month. The expected index of business activities of the construction industry has been operating in the high boom range for two consecutive months, indicating that driven by factors such as the accelerated promotion of stable investment in the near future and the moderately advanced development of some major infrastructure projects and projects, construction enterprises have better expectations for the development of the industry.
Investment suggestions this week:
The two sessions of the National People's Congress and the National People's Congress in 2022 put steady growth in a more prominent position, and the policy drive of the infrastructure sector is strong. At present, the demand for two new and one heavy construction in the construction industry is clear, and all localities have successively issued construction plans, with sufficient capital supply. This week, it continued to recommend high-quality infrastructure targets benefiting from the "two new and one heavy" under the goal of steady growth, At the same time, it's also suggested to focus on the quality targets that benefit from the in-depth advancement of affordable housing and the quality targets in the field of new power construction, including: 1) China State Construction Engineering Corporation Limited(601668) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\withsignificant advantages, it is the main force to add weight to infrastructure, And the main beneficiaries of steady growth and increased industry concentration; 2) China Design Group Co.Ltd(603018) , Anhui Transport Consulting & Design Institute Co.Ltd(603357) , high-quality survey and design targets at the front of the industrial chain, give priority to the steady growth of infrastructure and the high growth of infrastructure demand in the province during the 14th five year plan; 3) Shenzhen Capol International&Associatesco.Ltd(002949) , the leader of prefabricated architectural design, benefited from the release of demand for affordable housing and prefabricated buildings during the 14th Five Year Plan period. At the same time, it cooperated with the leader of industrial software to develop BIM software, which achieved remarkable results in the transformation of layout construction technology business, and contributed to the growth of future performance and the improvement of valuation; 4) Guangzhou Metro Design & Research Institute Co.Ltd(003013) , Zhejiang Tiantie Industry Co.Ltd(300587) , respectively, are leading enterprises in urban rail design and urban rail vibration reduction. They have a solid industry position, strong technical and brand strength and high performance, and fully benefit from the release of urban rail construction demand under the promotion of new infrastructure.
5) Suwen Electric Energy Technology Co.Ltd(300982) , under the background of new power system construction with new energy as the main body, construction enterprises involved in power construction are expected to benefit from the increased demand for power grid investment, construction, operation and maintenance. It is recommended that the leader of power construction and operation on the user side Suwen Electric Energy Technology Co.Ltd(300982) .
Industry investment perspective
In 2022, the construction industry is expected to usher in multiple development opportunities of fundamentals, policy driven and "construction +", and the industry is in the undervalued range, with prominent investment value.
The overall fundamentals of the construction industry are improving. In particular, the rapid growth of orders from central infrastructure enterprises and local infrastructure leaders will help improve performance. It will take the lead in benefiting from the release of infrastructure demand under the goal of stable growth. At the same time, it will actively layout new businesses, improve comprehensive strength and help valuation repair.
The policy is expected to become another driving force for the "spring agitation" of the industry in 2022. In the near future, the steady growth policy will continue to increase, the active fiscal policy should improve the efficiency, the local special debt can be launched within a certain period, the monetary policy should be flexible and appropriate, and the liquidity should be reasonable and abundant. In 2022, there are expectations of reducing reserve requirements and interest rates, and the loose monetary policy is conducive to the development of the industry. The "two new and one heavy" construction is expected to increase, and the infrastructure investment is moderately ahead of schedule, which is worth looking forward to.
The construction industry actively embraces the "new economy" and actively layout Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) . BIPV, energy storage and carbon sequestration have become the key areas of layout of listed companies. Some companies Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) have achieved initial results and are expected to continue to make efforts in the future to help improve the valuation level of companies and industries. Industry leaders and regional leaders will continue to cultivate traditional businesses, expand the whole industrial chain and extend upstream and downstream around traditional businesses, and fully benefit from the improvement of industry concentration. The release of future performance is sustainable.
On the whole, the construction industry has both "white horse" with good performance and extremely low valuation, and "dark horse" with layout of "building +" and standing at the market outlet. The overall trend of the industry is good, with fundamental support and policy catalysis. In addition, the "building +" helps to improve the valuation and is optimistic about the overall trend of the construction industry in 2022.
Suggestions on medium and long-term configuration
The overall fundamentals of the construction industry have improved. Industry leaders and regional leaders have benefited from the "national advance and people retreat" and the improvement of industry concentration. Both newly signed orders and performance have increased rapidly. At the same time, the construction industry actively embraces the "new economy" and the "construction +" era is coming, opening up the future development space of the company. On the main line of configuration, we propose to actively layout the "construction +" new business sector around the "two new and one heavy" infrastructure leaders and the "double carbon" background:
(1) "two new and one heavy" infrastructure leaders. Central construction enterprises and regional infrastructure leaders will fully benefit from the construction of "two new and one heavy", and central construction enterprises and regional infrastructure leaders are the main beneficiaries of "national advance and people retreat" and the improvement of industry concentration. The newly signed orders and performance are bright, and the valuation advantage is very significant. It is suggested to pay attention to China State Construction Engineering Corporation Limited(601668) , China Communications Construction Company Limited(601800) , China Railway Construction Corporation Limited(601186) , Metallurgical Corporation Of China Ltd(601618) and other central construction enterprises and Shandong Hi-Speed Road&Bridge Co.Ltd(000498) , Anhui Construction Engineering Group Corporation Limited(600502) and other regional infrastructure leaders. At the same time, urban rail design and vibration reduction will fully benefit from the release of urban rail transit demand under the construction of new urbanization. Guangzhou Metro Design & Research Institute Co.Ltd(003013) and Zhejiang Tiantie Industry Co.Ltd(300587) .
(2) high quality target of infrastructure survey and design China Design Group Co.Ltd(603018) , Anhui Transport Consulting & Design Institute Co.Ltd(603357) , the front end of the industrial chain gives priority to benefiting from the release of infrastructure demand under the goal of steady growth. During the 14th Five Year Plan period, the planned infrastructure investment scale of many provinces increased significantly, the contracting advantage of leading orders of high-quality design was significant, and the market share could be increased in time.
(3) pumped storage beneficiary company. With the change of energy structure, power supply security has been put on the agenda, and energy storage has become the main means to solve power security. As the most important way of energy storage, pumped storage has been strongly supported by national policies. In the future, pumped storage will enter a stage of rapid growth and encourage social capital to enter. Water conservancy and hydropower engineering enterprises own the construction and operation of pumped storage projects, and most of them have hydropower operation assets. It is possible to layout pumped storage power stations, which is expected to fully benefit the development of pumped storage in the future. Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Guangdong No.2 Hydropower Engineering Company Ltd(002060) and Anhui Construction Engineering Group Corporation Limited(600502) .
(4) prefabricated buildings. We believe that under the background of carbon peak and carbon neutralization goal, the prefabricated construction field mainly in the form of concrete structure and steel structure will continue to fully benefit from the further improvement of the industry prosperity and the release of demand, and is expected to become an important development field under the carbon neutralization goal. It is suggested to pay attention to Shenzhen Capol International&Associatesco.Ltd(002949) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Zhejiang Southeast Space Frame Co.Ltd(002135) .
(5) new power construction. Under the background of new power system construction with new energy as the main body, construction enterprises involved in the field of power construction are expected to benefit from the improvement of power grid investment and construction, operation and maintenance demand, and the release of BIPV and energy storage demand. It is recommended to recommend Suwen Electric Energy Technology Co.Ltd(300982) , the leader of power construction and operation on the user side, the high-quality private enterprise of power intelligent inspection Hangzhou Shenhao Technology Co.Ltd(300853) , the Zhejiang Southeast Space Frame Co.Ltd(002135) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Tus-Design Group Co.Ltd(300500) Shenzhen Zhongzhuang Construction Group Co.Ltd(002822) and Dongzhu Ecological Environment Protection Co.Ltd(603359) of carbon sink layout.
Risk tips: epidemic control is not as expected, policy implementation is not as expected, economic downside risk, PPP promotion is not as expected, fixed asset investment is declining, local financial growth is slow, etc
