This week, the rise of the construction sector underperformed the overall market. In November, infrastructure investment declined, the decline in real estate investment narrowed, the decline in construction and completion improved significantly, and real estate sales also decreased year-on-year. Shenzhen municipal government issued documents related to accelerating BIM Technology and Shenzhen Capol International&Associatesco.Ltd(002949) signed a strategic cooperation agreement with Wanyi technology.
The overall rise in construction underperformed the market, with more gains and less losses in sub sectors: this week, the Shenwan construction index closed at 2238.8 points, up 0.5% 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 more or fell less, of which the fabricated rose by 4.9%, with the largest increase; Gardens, construction machinery and electrical equipment fell 0.3%, the largest decline.
The Shenzhen municipal government issued documents related to accelerating BIM Technology and signed a strategic cooperation agreement with Wanyi technology. Recently, the Shenzhen Municipal People’s government issued the implementation opinions on accelerating the application of building information model (BIM) technology (Trial), requiring the full implementation of BIM Technology Application in government investment and major projects in Shenzhen from January 1, 2022; From January 1, 2023, BIM Technology Application will be fully implemented in all new construction projects in the city; In 2025, a relatively safe and mature ecological environment for BIM Technology Application will be formed. On December 29, Shenzhen Capol International&Associatesco.Ltd(002949) signed a strategic cooperation agreement with Wanyi technology, and the two sides will cooperate in AI drawing review. The release of relevant documents in Shenzhen shows the government’s determination to promote the rapid development of BIM Technology and significantly improve the penetration rate in the city. Shenzhen Capol International&Associatesco.Ltd(002949) has obvious first mover advantages in BIM Technology and has established long-term and close strategic cooperation with government departments. Under the high technical requirements of affordable housing construction in Shenzhen, the company’s advantages in the field of prefabricated construction and BIM Technology will be more prominent.
Shenzhen Capol International&Associatesco.Ltd(002949) signed a strategic cooperation agreement with Wanyi technology in AI drawing review, which is expected to further improve the data capture ability in the whole process of construction and further help the company improve efficiency and reduce cost.
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
Focus on the infrastructure sector, Shenzhen Capol International&Associatesco.Ltd(002949)
Main risks of rating
Risk tip: manufacturing investment slowed down, the promotion of prefabricated buildings was less than expected, and macro liquidity tightened.
(BOCI Securities)
