This week (March 14, 2022 – March 18, 2022, the same below): the building decoration sector (SW) rose or fell by - 1.27% this week. In the same period, the CSI 3 million and wandequan a index rose or fell by - 0.94% and - 1.31% respectively, and the excess return was - 0.33% and 0.04% respectively.
Comments on important policies, event changes and data tracking of the industry: (1) the Ministry of Finance and the Ministry of housing and urban rural development jointly issued the measures for the administration of subsidies for affordable housing projects in cities and towns of the central government. The Measures specify the implementation period of subsidies to 2025 and the scope of fund support, including rental housing security, transformation of old urban communities and transformation of urban shantytowns. (2) The CSRC issued a document: further promote the pilot of public offering REITs and further promote the virtuous circle of investment and financing. The article shows that the CSRC is guiding the exchange to study and formulate the raising rules of infrastructure REITs, which is conducive to the listed high-quality operators to issue more shares to acquire assets by relying on the market mechanism, so as to better form a virtuous circle of investment and financing. In addition, the CSRC is stepping up efforts to promote 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, better attracting the participation of social capital and promoting the transformation of the industry to a new development model. (3) The National Bureau of statistics released the operation of the national economy from January to February: from January to February, the national fixed asset investment (excluding farmers) was 5076.3 billion yuan, a year-on-year increase of 12.2%, 7.3 percentage points higher than that in 2021 and 8.3 percentage points higher than the average growth rate in 2021. By sector, infrastructure investment increased by 8.1%, manufacturing investment increased by 20.9%, and real estate development investment increased by 3.7%. According to the economic data of February, the investment is strong while the physical demand is still weak. We judge that the reason is that the project approval and implementation have been accelerated under the force of steady growth, and the progress of capital investment has been significantly accelerated, but the new projects have not yet contributed to the physical demand, and the pull to the real economy needs to be fully transmitted.
Zhou viewpoint
We suggest focusing on investment opportunities in the construction sector from the following three directions:
1) valuation repair opportunities under the recovery of infrastructure chain prosperity under steady growth: the economic data in February showed that the investment was strong, while the demand for physical goods such as cement was still weak, reflecting that the support effect of steady growth on the real economy has not yet fully appeared. We believe that steady growth will continue to increase, broad money + broad finance will further develop, and the prosperity of the infrastructure chain will continue to rise in the medium term. It is suggested to pay attention to the continuous repair opportunities for the valuation of leading infrastructure enterprises with historically low valuation and stable performance, and it is suggested to pay attention to China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) , China Communications Construction Company Limited(601800) , Jsti Group(300284) , etc.
2) there are bright spots in the demand structure and investment opportunities under the incremental development of new businesses: with the promotion of policies such as double carbon strategy and green and energy-saving buildings, the prosperity of fabricated buildings, energy conservation and carbon reduction and infrastructure segments related to new energy is high, and enterprises with relevant transformation layout are expected to benefit. Last week, the 14th five year plan for building energy efficiency and green building development was issued, which proposed to promote building photovoltaic, prefabricated construction and decoration. It is suggested to pay attention to Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Shenzhen Capol International&Associatesco.Ltd(002949) , Zhejiang Yasha Decoration Co.Ltd(002375) , China Railway Prefabricated Construction Co.Ltd(300374) ; Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) , etc. of new energy business transformation and incremental development; Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Center International Group Co.Ltd(603098) , Zhejiang Southeast Space Frame Co.Ltd(002135) and others benefiting from the large volume of building photovoltaic market, and Jiangxi Geto New Materials Corporation Limited(300986) and other leasing service providers of green building materials (aluminum formwork).
3) reform direction of state-owned enterprises: 2022 is the closing year of the three-year action of state-owned enterprise reform. It is expected that while the reform of state-owned enterprises is advancing steadily, the previous reform dividends in corporate governance structure, strengthening incentives, mixed reform and improving efficiency and stimulating vitality are expected to enter the release period. It is suggested to pay attention to the directions of performance improvement with cost reduction and efficiency increase, new business transformation layout and asset reorganization. It is suggested to pay attention to Sichuan Road & Bridge Co.Ltd(600039) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) Shandong Hi-Speed Road&Bridge Co.Ltd(000498) , Metallurgical Corporation Of China Ltd(601618) etc.
Risk tips: the epidemic situation exceeded expectations, the real estate credit risk was out of control, the policy concentration exceeded expectations, and the progress of state-owned enterprise reform was lower than expected.
