Industry and policy developments
1) On January 2, 2022, the Ministry of water resources issued the guiding opinions on the implementation of major national water network projects and the implementation plan for the implementation of major national water network projects during the 14th Five Year Plan period. According to the guidance, by 2025, build a number of national water network backbone projects, orderly implement the construction of provincial, municipal and county water networks, strive to make up for weaknesses and weak links such as water resource allocation, urban and rural water supply, flood control and drainage, water ecological protection and intelligent water network, and further improve the ability of water security.
2) On January 2, 2022, the official wechat of the Ministry of transport, recently, the Ministry of transport, the State Railway Administration, the Civil Aviation Administration of China and the State Post Office jointly issued the "14th five year plan" comprehensive transportation system construction scheme for the new land and sea channel in the West (hereinafter referred to as the "construction scheme"), Make systematic planning and deployment arrangements for the construction of the comprehensive transportation system of the new land and sea channel in the West during the 14th Five Year Plan period.
3) On January and February 30, 2021, the general office of the Ministry of housing and urban rural development disclosed the notice on strengthening the prevention and control of common problems in the quality of indemnificatory housing (Exposure Draft), which proposed that the general contracting mode should be adopted for the construction of indemnificatory housing, and vigorously promote the assembly and other green construction methods. Actively promote new organization and management modes such as architect responsibility system and whole process engineering consultation, and promote the coordination of various disciplines such as architecture, structure, electromechanical equipment and decoration.
Market review this week
This week (12.27 - 12.31), the construction industry (Shenwan building decoration index) increased by + 0.45% (HS300 was 0.39%). The top 5 industry increases were Shenzhen Capol International&Associatesco.Ltd(002949) (+ 19.69%), Center International Group Co.Ltd(603098) (+ 19.06%), Cofco Engineering & Technology Co.Ltd(301058) (+ 19.03%), Shenzhen Jiang&Associates Creative Design Co.Ltd(300668) (+ 15.73%), East China Engineering Science And Technology Co.Ltd(002140) (+ 13.26%); The top 5 industry declines this week were Shanghai Luoman Lighting Technologies Inc(605289) (- 20.25%), S.P.I Landscape Design Co.Ltd(300844) (- 10.17%), Tianyu Eco-Environment Co.Ltd(603717) (- 9.04%), Shenzhen Bauing Construction Holding Group Co.Ltd(002047) (- 7.93%) and Shenzhen Institute Of Building Research Co.Ltd(300675) (- 7.89%).
From the perspective of the overall P / E ratio of the industry, the P / E ratio of the architectural decoration industry (TTM, index average overall method) was 9.66 times as of December 31, an increase compared with last week. The industry price to book ratio (MRQ) was 0.95 times, up from last week. The current industry's price earnings ratio (TTM) is the lowest top 5 Shaanxi Construction Engineering Group Corporation Limited(600248) (2.85), China State Construction Engineering Corporation Limited(601668) (4.0 6), China Railway Construction Corporation Limited(601186) (4.1 7), Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (4.80), China Railway Group Limited(601390) (5.16); The lowest price to book ratio (MRQ) is China Railway Construction Corporation Limited(601186) (0.53), Shenzhen Grandland Group Co.Ltd(002482) (0.60), China Communications Construction Company Limited(601800) (0.62), China Railway Group Limited(601390) (0.64), China State Construction Engineering Corporation Limited(601668) (0.66). This week, the weekly growth rate of building decoration industry (SW) was + 0.45%, which was stronger than Shanghai and Shenzhen 300 (+ 0.39%), weaker than Shanghai Composite Index (+ 0.60%) and Shenzhen Component Index (+ 0.99%). The weekly growth rate ranked 21st among the 28 primary industries of SW. A total of 101 companies in the construction industry recorded an increase this week, accounting for 69%; The number of companies with an increase of more than the industry index (+ 0.45%) this week was 96, accounting for 66%. The construction industry recorded an increase this week, the number of companies decreased, the number of companies with an increase of more than the industry decreased, and the industry ranking decreased by 3 places compared with last week (19th). From the structure of this week's increase, the top targets of this week's increase are mainly housing construction design, steel structure, infrastructure survey and design and professional engineering targets. The Shenzhen Capol International&Associatesco.Ltd(002949) (+ 19.69%) and Shenzhen Jiang&Associates Creative Design Co.Ltd(300668) (+ 15.73%) of housing construction targets increased by more than 15% this week; The target Center International Group Co.Ltd(603098) (+ 19.06%) and Zhejiang Southeast Space Frame Co.Ltd(002135) (+ 12.78%) of steel structure plate increased by more than 10% this week; The Jiangsu Zhongshe Group Co.Ltd(002883) (+ 10.73%), Holsin Engineering Consulting Group Co.Ltd(603909) (+ 9.72%) and Guizhou Transportation Planning Survey&Design Academe Co.Ltd(603458) (+ 8.70%) of the capital construction survey and design consulting targets increased the most this week; In addition, Cofco Engineering & Technology Co.Ltd(301058) (+ 19.02%), East China Engineering Science And Technology Co.Ltd(002140) (+ 13.26%) and L&K Engineering (Suzhou) Co.Ltd(603929) (+ 10.85%) of the professional engineering sector ranked among the top 10 in the industry this week.
Interpretation of policies / highlights of this week
Under the tone of "two new and one heavy", the construction of major transportation and water conservancy projects was promoted this week. Recently, the Ministry of water resources issued the guiding opinions on the implementation of major national water network projects (hereinafter referred to as the Guiding Opinions), and the general office of the Ministry of water resources issued the implementation plan for the implementation of major national water network projects during the 14th Five Year Plan period (hereinafter referred to as the implementation plan), which clearly defined the main objectives of accelerating the construction of major national water network projects, Focus on improving the optimal allocation system of water resources and systematically deploy various tasks and measures.
Among them, the guiding opinions require that a number of national water network backbone projects be built by 2025, the construction of provincial, municipal and county water networks be implemented in an orderly manner, and the water security guarantee capacity be further improved. In terms of improving the optimal allocation system of water resources, a number of major water diversion and transfer projects and key water source projects have been completed, with a new water supply capacity of 29 billion cubic meters; The guarantee level of water supply in urban and rural areas was further improved, and the popularization rate of tap water in rural areas reached 88%; The irrigation and drainage backbone project system in large and medium-sized irrigation areas has been gradually improved, with an additional and restored effective irrigation area of 15 million mu; The level of digital, networked, intelligent and refined dispatching has been effectively improved.
In 2011 No. 1 central document China proposed that water conservancy investment will reach four trillion in the next ten years, and water conservancy construction will be an important part of China's "two new heavy" construction goals. The scale of investment will be enhanced significantly. The investment in water conservancy construction in China in the 2015-2018 years will be 545 billion 200 million yuan, 609 billion 900 million yuan, 713 billion 200 million yuan and 687 billion 300 million yuan, respectively, up 33.53%, 11.87%, or more than that of the previous year. 164% and - 3.64%. By 2018, the completed investment in water conservancy construction will exceed 4 trillion yuan, and the established investment target of 4 trillion yuan will be completed two years ahead of schedule. In 2020, China's investment in water conservancy construction hit a record high, 45 major water conservancy projects were started, and the investment in water conservancy construction reached nearly 770 billion yuan, which played an important role in stabilizing investment and maintaining growth.
The rapid growth of China's investment in water conservancy construction has a very obvious pulling effect on related industries. Water conservancy investment plays a great role in stabilizing growth, expanding domestic demand and stabilizing employment. In the government work report in May 2020, water conservancy investment was included in the "two new and one heavy". In July 2020, the national standing committee studied and deployed 150 key water conservancy projects from 2020 to 2022, and clearly put forward that major water conservancy investment can only be strengthened and can not be weakened. In the government report in 2020, it was proposed to focus on supporting the "two new and one heavy" construction, including strengthening transportation For the construction of water conservancy and other major projects, the central economic work conference in December 2021 still emphasized two new and one heavy construction, and the water conservancy investment welcomes the development dividend again. In the future, the scale of water conservancy investment is considerable. It is suggested to pay attention to the Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Anhui Construction Engineering Group Corporation Limited(600502) of high-quality projects in the water conservancy sector.
According to the official wechat news of the Ministry of transport on January 2, recently, the Ministry of transport, the State Railway Administration, the Civil Aviation Administration of China and the State Post Office jointly issued the "14th five year plan" comprehensive transportation system construction scheme for the new land and sea channel in the West (hereinafter referred to as the "construction scheme"), Make systematic planning and deployment arrangements for the construction of the comprehensive transportation system of the new land and sea channel in the West during the 14th Five Year Plan period. According to the construction plan, by 2025, we will promote the formation of a comprehensive transportation system of new land and sea channels in the west, which is connected from north to south, linked by land and sea, open and shared, powerful radiation and coordinated, and make significant progress in "land and sea connection, strong port, smooth hub, smooth connection and sufficient capacity", so as to basically build a safe, convenient, efficient, green The economic development of the western land and sea new channel provides strong support. By 2035, a comprehensive transportation system for the new land and sea channel in the West will be formed in an all-round way, with north-south connection, land and sea linkage, openness and sharing, strong radiation and coordination, so as to support the construction of a safe, convenient, efficient, green and economic new land and sea channel in the West.
In the field of transportation and water conservancy construction, the market share of high-quality central enterprises and local state-owned enterprises deeply engaged in infrastructure construction continues to increase. We believe that under the background of steady growth, the dominant position of infrastructure industry leaders and regional leaders will be further strengthened. For example, 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, Shandong Hi-Speed Road&Bridge Co.Ltd(000498) , Anhui Construction Engineering Group Corporation Limited(600502) and other regional infrastructure leaders have signed new orders and performed well. The valuation advantage is very significant, and the future performance is worth looking forward to.
Recently, policy documents related to affordable housing construction at the national, provincial and municipal levels have been intensively released. On January and February 30 this week, the general office of the Ministry of housing and urban rural development disclosed the notice on strengthening the prevention and control of common problems in the quality of indemnificatory housing (Exposure Draft), which proposed that the general contracting mode should be adopted for the construction of indemnificatory housing, and vigorously promote the assembly and other green construction methods. Actively promote new organization and management modes such as architect responsibility system and whole process engineering consultation, and promote the coordination of various disciplines such as architecture, structure, electromechanical equipment and decoration. At the local level, on December 28, the Beijing Municipal Commission of housing and urban rural development and other four ministries jointly issued the notice on further standardizing the construction of public rental housing and indemnificatory rental housing for new residential projects in the city, which made it clear that in the new commercial housing, resettlement housing and other projects, each district proposed to vigorously develop indemnificatory rental housing according to the residential construction area of the project every year. According to the summary information of China construction network, Shanghai proposes to build and raise 400000 sets (rooms) of affordable rental housing during the 14th Five Year Plan period, accounting for about 40% of the total housing supply; Guangdong proposed to raise 740500 sets (rooms) of construction indemnificatory rental housing during the 14th Five Year Plan period; Jiangsu proposes to add 200000 indemnificatory rental houses during the 14th Five Year Plan period; Guangxi proposes to build 13900 affordable rental housing units this year; Wuhan plans to stipulate that the newly-built commercial housing in the central urban area shall be allocated with indemnificatory rental housing at the rate of 6%.
We believe that the application of prefabricated buildings in affordable housing has favorable policy and technical conditions. On October 25, 2021, the State Information Office held a press conference on opinions on promoting green development of urban and rural construction. Tian Guomin, director of the standard quota Department of the Ministry of housing and urban rural development, disclosed at the meeting that the next step is to, It will guide local governments to actively apply prefabricated concrete structure in indemnificatory housing and commercial housing, and actively carry out pilot projects of steel structure housing.
This round of affordable housing construction has sufficient space, which will help promote the development of prefabricated buildings. It is suggested to pay attention to the leader of prefabricated architectural design Shenzhen Capol International&Associatesco.Ltd(002949) . The company's Prefabricated design level is leading, has rich design experience in the field of talent affordable housing, and has established a close cooperative relationship with government agencies in Guangdong, which provides an incremental basis for the company's project undertaking in the field of talent affordable housing; As well as Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) the contracting target of steel structure engineering, the company is a high-quality leader in the field of steel structure engineering, actively transforming from steel structure engineering subcontractor to EPC engineering general contractor, which is expected to expand market share. In addition, the company has improved its technical level and project experience in the field of fabricated architecture, developed fabricated product system and undertook several fabricated integration projects, At present, the steel structure promotion policies are intensively released, there is sufficient room for the upward demand of the industry, and the EPC mode continues to be promoted. The company is expected to fully benefit and develop.
On December 31 this week, the National Bureau of Statistics announced the operation of China's purchasing manager index (PMI) in December 2021. In December 2021, the PMI of manufacturing industry was 50.3%, an increase of 0.2 percentage points over the previous month, above the critical point, and the book review of manufacturing industry continued to pick up.
In December, the non manufacturing business activity index was 52.7%, a slight increase of 0.4 percentage points over the previous month, continuing to be higher than the critical point, and the recovery pace of the non manufacturing industry accelerated. By industry, the business activity index of the construction industry was 56.3%, down 2.8 percentage points from the previous month. The new order index of the construction industry was 50.0%, down 4.2 percentage points from the previous month, indicating that the number of new engineering contracts signed by construction enterprises decreased from the previous month. The employment index of the construction industry was 51.8%, up 0.5 percentage points from the previous month.
Overall, the construction industry fell in December. Affected by the cold wave cooling weather and the approaching of the "two festivals", the business activity index of the construction industry was 56.3%, down 2.8 percentage points from the previous month, reflecting a slowdown in the production expansion of the construction industry. Recently, the policy of ensuring supply and price stability has been effective. The price index of inputs in the construction industry is 48.1%, which has been lower than the critical point for two consecutive months, and the cost pressure of enterprises has been alleviated to a certain extent.
Looking forward to 2022, the central economic work conference in 2022 focuses on stability and expresses strong expectations for stable growth. In the macro policy part, the meeting proposed to ensure the intensity of fiscal expenditure and accelerate the progress of expenditure. At the same time, it was mentioned for the first time that infrastructure investment should be carried out moderately in advance, indicating that infrastructure is expected to become an important starting point for this round of steady economic growth. A certain proportion of public rental housing and indemnificatory rental housing will be built in 2022. Among them, the allocation of commercial housing projects is mainly indemnificatory rental housing. On December 31, 2021, Hefei housing security and real estate administration of Anhui Province issued a notice on printing and distributing the housing development plan of Hefei during the 14th five year plan. The plan specifies that during the 14th Five Year Plan period, 580000 new commercial houses are planned to be supplied in the city; Raise 150000 sets / room of affordable rental housing; 82800 sets of shantytowns have been newly constructed.
Affordable housing is one of the key construction sectors during the 14th Five Year Plan period in China. In June this year, the general office of the State Council issued the opinions on accelerating the development of affordable rental housing, which defined the top-level design of the housing security system at the national level for the first time. The national housing security system will take public rental housing, indemnificatory rental housing and housing with common property rights as the main body. In August 2021, the Ministry of housing and urban rural development said that it would focus on the development of affordable rental housing, further improve the housing security system, increase the supply of affordable housing, and strive to achieve housing for all people. The central economic work conference in January and February 2021 proposed to adhere to the positioning that houses are used for living rather than speculation, adhere to the simultaneous development of rent and purchase, accelerate the development of long-term rental housing market and promote the construction of indemnificatory housing.
The infrastructure investment plan is expected to be laid out in advance.
In terms of capital supply, the accelerated issuance of local government special bonds in the second half of 2021 is expected to form physical investment in 2022. Recently, the Ministry of finance has issued a quota of 1.46 trillion yuan of new special debts in 2022 to all localities in advance. In this regard, the Ministry of Finance said it would continue to strengthen supervision and promote the issuance of quotas in advance in the first quarter of next year, Provide strong support for stabilizing the macro-economic market. In 2022, the special bonds will be mainly used in nine major directions: transportation infrastructure, energy, agriculture, forestry and water conservancy, ecological and environmental protection, social undertakings, urban and rural cold chain, etc
