The construction sector fell this week, underperforming the overall market. In November, infrastructure investment declined, the decline in real estate investment narrowed, construction fell, completion improved significantly, and real estate sales also decreased year-on-year. By 2021, all objectives and tasks in the field of transportation will be fully completed, and the “14th five year plan” of transportation will have a good start.
The overall decline in construction underperformed the market, and the segments rose less and fell more: this week, the Shenwan construction index closed at 2228.7 points, down 1.2% month on week, underperforming the market. The industry’s average price to book ratio was 0.9 times, which was basically flat compared with last week. Segments rose less and fell more, of which construction machinery and electronics rose 10.1%, the largest increase; Industrial construction fell 4.6%, the largest decline.
All objectives and tasks have been fully completed and the “14th five year plan” of transportation has made a good start: on December 23, the Ministry of transportation held a national transportation work conference in 2022. While summarizing this year’s transportation work, it also deployed the relevant situation of next year’s transportation work. From January to November, China completed a fixed asset investment of 3.28 trillion yuan in transportation, including 640.1 billion yuan in railways, 2.53 trillion yuan in roads and waterways and 105 billion yuan in civil aviation. It is estimated that more than 9000 kilometers of expressways will be reconstructed and expanded throughout the year, about 1000 kilometers of high-grade waterways will be added and improved, 9 newly certified civil transport airports will be issued, and more than 1000 kilometers of urban rail transit will be added. In 2021, the work of transportation will be steadily and orderly, and the annual objectives and tasks will be fully completed. Generally speaking, China’s transportation reform and development is stable, and a good start of the 14th five year plan has been achieved. The relevant person in charge of the Ministry of transport said that in 2022, the transportation department will continue to adhere to the traffic first, identify the positioning, perform their duties, continue to promote the construction of major projects and provide all-round services for the coordinated development of the region. During the 14th Five Year Plan period, all provinces and cities have increased their investment in the field of transportation. It is expected that the proportion of transportation construction in infrastructure construction investment is expected to increase during the 14th Five Year Plan period.
Infrastructure investment fell year-on-year, and the decline in real estate investment narrowed: in November, the fixed asset investment was 7.0 trillion, a decrease of 2.2%, of which the completed investment in infrastructure and real estate development was 1.8 trillion and 1.2 trillion respectively, with a year-on-year growth rate of – 7.3% and – 4.3% respectively. In November, real estate and infrastructure investment continued to decline year-on-year, but the year-on-year decline in real estate investment was smaller than that in October. In infrastructure construction, the investment in power, transportation and public utilities was 0.34 trillion yuan, 0.56 trillion yuan and 0.85 trillion yuan respectively. The year-on-year growth rates were – 1.4%, – 9.5% and – 8.1% respectively. The year-on-year decline in infrastructure investment in this month is larger than that in October, the year-on-year stability of power investment is basically maintained, and the year-on-year decline in transportation and public investment is obvious. However, the investment in public water conservancy increased significantly compared with October, with a growth rate of 14.3%.
The decline in construction and completion improved, and the land transaction was basically stable: in November, the planned land transaction area in 100 large and medium-sized cities totaled 110 million square meters, with a decrease of 0.2%, and the average transaction floor price was 2660 yuan / square meter. The construction, completion and sales areas were 160, 115 and 150 million square meters respectively, with a year-on-year growth rate of – 21.0%, 15.4% and – 14.0% respectively. In November, the land transaction area basically maintained stability year-on-year and increased month on month; Compared with the same period last year, the new construction data decreased, the completion data changed the decline in October, increased year-on-year, and increased significantly month on month. Recently, there has been a marginal easing trend in the policy of the real estate industry, and under the policy requirements of “moderately ahead of infrastructure investment”, the new construction data may improve. By the end of the year, the completion stage of real estate enterprises is expected to drive the completion data to continue to improve.
Key recommendation
Key recommended infrastructure sector
Main risks of rating
Risk tip: manufacturing investment slowed down, the promotion of prefabricated buildings was less than expected, and macro liquidity tightened.
