Weekly report of building decoration industry: the main line of steady growth will continue, and pay attention to the implementation of mandatory norms for green buildings

[core view of this week] the better than expected economic data this week raised concerns about the trend of stable growth policies. However, from the perspective of three-year compound growth rate, fixed investment increased by only 4.6%, and infrastructure increased by only 1.0%. Although it has improved, it is still in a weak range. The foundation of economic recovery under the disturbance of the epidemic is not stable, and the follow-up stable growth policies are still expected to be strengthened. In addition, six ministries and commissions, including the financial commission, have actively expressed their position to stabilize the expectations of key industries such as real estate, and policy confidence has been boosted again. It is expected that subsequent policies related to real estate deviation correction are expected to continue to be issued under the requirements of stable economic growth, so as to promote the expected repair of the real estate chain. Continue to recommend the main line of steady growth: the real estate chain focuses on recommending the leader of real estate and construction of undervalued central enterprises China State Construction Engineering Corporation Limited(601668) (March gold stock, pe3.9x); The capital construction chain mainly recommends China Communications Construction Company Limited(601800) (CCCC REITs passed the Shanghai Securities Review this week and continued to benefit from REITs development, pe6.0x), and high growth local state-owned enterprises Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (pe4.6x); The manufacturing chain focuses on recommending China National Chemical Engineering Co.Ltd(601117) (a large repurchase in the secondary market is proposed to be used for equity incentive to demonstrate growth confidence, pe8.5x). The national mandatory engineering construction code of the Ministry of housing and urban rural development “general code for building energy conservation and renewable energy utilization” will be officially implemented on April 1 this year (which requires that “new buildings shall be equipped with Cecep Solar Energy Co.Ltd(000591) system”). In combination with the recent “14th five year plan” for building energy conservation and green building development plan of the Ministry of housing and urban rural development, the development of photovoltaic buildings (BIPV / bapv), prefabricated buildings, green energy-saving transformation, green building materials and other subdivided fields is expected to accelerate, Key recommendations: 1) steel structure leaders Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) (pe11x), Anhui Honglu Steel Construction(Group) Co.Ltd(002541) (pe15x), building support equipment leasing leaders Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) (the rental income of aerial working platform doubled from January to February, and the industry maintained a high boom, pe16x); 2) Microgrid leader Acrel Co.Ltd(300286) (pe25x) and distribution network EPCO leader Suwen Electric Energy Technology Co.Ltd(300982) (pe22x) benefiting from the growth of demand for photovoltaic buildings and building electrification projects; 3) Heating energy saving transformation leader Runa Smart Equipment Co.Ltd(301129) (pe18x).

The investment data from January to February is better than expected, but the foundation of recovery is not solid, and the steady growth policy is expected to be strengthened. The economic data released this week was better than the market expectation, causing the market to worry about the trend of the follow-up steady growth policy. However, we believe that although the economic data recovered significantly, it is still in a weak range. Compared with the three-year compound growth rate from January to February of 19, the fixed investment increased by 4.6%, the infrastructure investment (excluding electricity, etc.) increased by 1.0%, and the manufacturing investment increased by 4.4%, all of which recovered slightly. Only the real estate investment increased by 6.3%, which was significantly better than expected, but the impact of the repeated epidemic on real estate sales since March will increase. Throughout the year, the recovery of consumption is sluggish, the export is uncertain, and the contribution of investment is expected to increase significantly. At present, the actual investment is still at a low level. The foundation of economic recovery under the disturbance of the epidemic is still unstable, and the follow-up steady growth policy is expected to be strengthened.

Detailed comments on the investment data are as follows: from January to February 2022, the fixed investment increased by 12.2% year-on-year, 7.3 PCT faster than 2021, and the performance was better than the market expectation. However, compared with the three-year compound growth rate from January to February of 19, it increased by only 4.6%, significantly lower than the growth rate of 5.4% in 2019 before the epidemic, and it is still in the recovery stage. Specifically: 1) infrastructure: from January to February, infrastructure investment (excluding electricity, etc.) increased by 8.1% year-on-year, with a compound growth rate of 1.0% in three years, infrastructure investment (full caliber) increased by 8.6% year-on-year and a compound growth rate of 2.3% in three years, only slightly warmer than last year. Infrastructure investment has been in a downturn in recent years and fluctuated greatly due to the impact of epidemic and other factors. From the perspective of three-year compound growth rate, the growth rate of full caliber infrastructure is only 2.3%. Although it has been improved, it is still in the low growth range, and there is still much room for improvement. The improvement of infrastructure investment is expected to be mainly due to the accelerated issuance and use of special bonds in the early stage, and the gradual development of new and old infrastructure. In terms of breakdown, the supply of electric heating gas and water increased by 11.7% year-on-year, which is expected to be mainly due to the accelerated investment in new power systems and other fields; Transportation, warehousing and postal services increased by 10.5% year-on-year, which is expected to be mainly due to the acceleration of large-scale projects by the central government; The management of Water Conservancy Environment and public facilities increased by 6% year-on-year, which was significantly improved compared with the negative growth last year. This year’s government work report has set the tone of gdp5 With the medium and high growth target of 5%, the investment contribution rate is expected to increase significantly. It is expected that the follow-up policies will continue to work and achieve results, so as to promote the improvement of infrastructure investment this year. 2) Real estate: from January to February, real estate investment increased by 3.7% year-on-year, 0.7 PCT slower than that of 2021, and the three-year compound growth rate was 6.3%, which was significantly better than expected. The growth rate of sales area was – 9.6% (the previous value was – 15.6% in December of 21 years), the new construction area was – 12.2 (the previous value was – 31.2%) year on year, and the amount of funds in place was – 17.7% (the previous value was – 19.3%) year on year. The decline of most important indicators has narrowed, but the medium and long-term loans of residents turned negative for the first time in February, which shows that the current demand for real estate is still weak, and the recent epidemic situation in many parts of the country has been repeated. The prevention and control measures will have a great impact on the normal sales activities of real estate, and the industry fundamentals are “worse”. Therefore, it is expected that the follow-up policies will continue to correct the deviation. 3) In terms of manufacturing: from January to February, manufacturing investment increased by 20.9% year-on-year, accelerating by 10.8 PCT compared with 2021, better than expected, but from the perspective of three-year compound growth rate, it increased by only 4.4%, slightly better than the growth rate of 3.1% in the whole year of 19. Among them, the investment in high-tech manufacturing industry increased by 42.7%, showing a bright performance. In the high-tech manufacturing industry, the investment in electronic and communication equipment manufacturing, medical equipment and instrument manufacturing increased by 50.3% and 41.2% respectively.

The six ministries and commissions actively stated their position to stabilize the real estate and pay attention to the opportunities for valuation and repair of the real estate chain. This week, the Finance Committee held a meeting and proposed to effectively revitalize the economy in the first quarter. For real estate enterprises, it is necessary to timely study and put forward effective risk prevention and resolution solutions, and put forward supporting measures for the transformation to a new development model. Subsequently, the people’s Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, Ministry of finance, safe and other ministries and commissions responded to the statement to stabilize the expectations of key industries such as real estate, such as encouraging M & A loans, delaying the expansion of real estate tax pilot, cooperating with and effectively resolving the risks of real estate enterprises, etc. Policy confidence has been strongly boosted again. The steady development of the real estate industry is crucial to the realization of GDP 5.5 this year The target of 5% is very important. It is expected that the follow-up real estate policy will continue to relax and the intensity is expected to increase, especially on the demand side and real estate financing side, so as to promote the continuous improvement of industry fundamentals, and the valuation of companies related to the real estate chain is expected to be repaired. The core recommendation underestimates the value of central enterprise real estate and construction leader China State Construction Engineering Corporation Limited(601668) (CNOOC real estate is expected to significantly benefit from the acceleration of the supply side reform of the real estate industry, the optimization of the construction business structure and the continuous improvement of the market share, and the market value promotion momentum is expected to be enhanced in the year when the three-year action plan for the reform of state-owned enterprises ends).

The mandatory code for green buildings is about to be implemented, and the BIPV / bapv industry is expected to benefit significantly. The Ministry of housing and urban rural development issued the national standard “general code for building energy conservation and renewable energy utilization” in October last year, which will be officially implemented on April 1 this year. The code is a mandatory engineering construction code, and all provisions must be strictly implemented. In combination with the recent “14th Five Year Plan” for building energy conservation and green building development plan of the Ministry of housing and urban rural development, photovoltaic buildings (BIPV / bapv), prefabricated buildings, green energy-saving transformation The development of subdivided fields such as green building materials is expected to accelerate.

It should be noted that the general specification proposes that ” Cecep Solar Energy Co.Ltd(000591) system shall be installed in new buildings” and ” Cecep Solar Energy Co.Ltd(000591) building integrated application system design shall be completed simultaneously with building design”. With the promotion of this mandatory policy, the BIPV / bapv industry is expected to increase significantly this year. From the perspective of business model, BIPV is closely connected with the overall construction process of the building and relies more on the EPC capacity of construction enterprises, bringing new growth points to construction enterprises. It is expected to benefit from the in-depth layout of the leaders in the early stage. It is recommended to focus on the steel structure leaders Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Zhejiang Southeast Space Frame Co.Ltd(002135) , Zhejiang Southeast Space Frame Co.Ltd(002135) , and pay attention to Jangho Group Co.Ltd(601886) , Zhejiang Yasha Decoration Co.Ltd(002375) .

The focus of deepening the pilot project of re800 . This week, the CSRC said that it is further promoting the pilot of infrastructure REITs: 1) it is studying and formulating REITs raising rules. If the raising mechanism is launched, it will help listed high-quality operators to issue more shares to acquire assets, optimize investment portfolio, promote M & A activities and better form a virtuous circle of investment and financing; 2) Pay close attention to promoting the implementation of the public offering REITs pilot project of indemnificatory rental housing, which is conducive to broadening the source of construction funds of indemnificatory rental housing. This week, the REITs project of China Communications Construction Company Limited(601800) Expressway (closed infrastructure securities investment fund of Huaxia China Communications Construction Company Limited(601800) Expressway) has passed the review of Shanghai Stock Exchange, and the listing platform of China Communications Construction Company Limited(601800) reits is expected to be preliminarily established. CCCC REITs is the first central enterprise Expressway REITs project, with the Jiayu Tongcheng section of Wuhan Shenzhen Expressway as the underlying asset, with an estimated value of about 9.8 billion yuan. At present, China Communications Construction Company Limited(601800) is putting 24 expressways into operation, with a total investment of 183.8 billion yuan. If we screen the projects that can be declared in the short term according to the conditions that the operation time is 3.5 years or more and the ratio of annual operation income to total investment is more than 5%, excluding the declared and overseas projects, the company has 6 expressways that meet the conditions, with a total investment of 41.8 billion yuan and a net asset of 9.8 billion yuan. The potential project resources of REITs that can be declared later are rich. Combined with the statement of the CSRC on REITs raising this week, if China Communications Construction Company Limited(601800) high-quality high-speed assets are continuously injected into the REITs platform through raising in the future, it will help China Communications Construction Company Limited(601800) accelerate the revitalization of stock assets and build a complete closed-loop operation mode of “investment construction withdrawal investment”. In addition, relying on the company’s professional operation ability in the infrastructure market, the company can optimize the management of its Expressway and other assets, fully enlarge the value of infrastructure assets and obtain additional investment income.

Investment suggestion: the foundation of economic recovery under the disturbance of the epidemic is not stable, and the follow-up steady growth policy is still expected to be strengthened. Continue to recommend the main line of steady growth: the real estate chain focuses on recommending the leader of real estate and construction of undervalued central enterprises China State Construction Engineering Corporation Limited(601668) (gold stocks in March); The capital construction chain mainly recommends China Communications Construction Company Limited(601800) , the leader of central enterprises, and high growth local state-owned enterprises Shandong Hi-Speed Road&Bridge Co.Ltd(000498) ; The manufacturing chain focuses on recommending chemical engineering leaders benefiting from the rise of oil price center China National Chemical Engineering Co.Ltd(601117) . The mandatory code for green buildings is about to be implemented, and the development of subdivided fields such as photovoltaic buildings (BIPV / bapv), prefabricated buildings, green energy-saving transformation and green building materials is expected to accelerate. Key recommendations: 1) steel structure leaders Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , building support equipment leasing leaders Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) , benefiting from the rapid development of photovoltaic buildings and green construction methods; 2) The leader of microgrid Acrel Co.Ltd(300286) , the leader of distribution network EPCO Suwen Electric Energy Technology Co.Ltd(300982) , benefiting from the growing demand for photovoltaic buildings and building electrification projects; 3) Heating energy saving transformation leader Runa Smart Equipment Co.Ltd(301129) .

Risk tips: the risk of policy promotion is less than expected, the risk of epidemic impact is more than expected, the risk of accounts receivable, overseas business risk, etc.

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