Weekly market of construction industry
The industry rose and fell in the week. This week (3.14-3.18), the building decoration industry (SW) fell - 1.27%, stronger than the Shanghai Composite Index (- 1.77%), weaker than the performance of Shanghai and Shenzhen 300 (- 0.94%) and Shenzhen Component Index (- 0.95%). The weekly increase ranked 10th among the 31 primary industries of sw31, and the industry ranking decreased by 5 compared with last week (5th). In terms of molecular sectors, engineering consulting services (4.16%), decoration (2.06%) and housing construction (0.25%) were the sectors that rose this week, and the performance of other professional engineering sectors was the weakest (- 3.06%).
Performance of individual stocks in a week. A total of 68 companies in the construction industry recorded an increase this week, accounting for 46.58%; 87 companies, accounting for 59.59%, rose more than the industry index (- 1.27%) this week. The construction industry recorded an increase this week, and the number of companies whose performance exceeded the industry increase increased compared with last week. The top 5 gainers of the industry are Zhejiang Construction Investment Group Co.Ltd(002761) (55.64%), Hualan Group Co.Ltd(301027) (29.39%), Hangzhou Landscape Architecture Design Institute Co.Ltd(300649) (28.70%), Shenzhen Institute Of Building Research Co.Ltd(300675) (21.09%), Hanjia Design Group Co.Ltd(300746) (18.05%); The top 5 industry declines this week were Inner Mongolia M-Grass Ecology And Environment (Group) Co.Ltd(300355) (- 7.84%), Sichuan Road & Bridge Co.Ltd(600039) (- 8.43%), China Nuclear Engineering & Construction Corporation Limited(601611) (- 10.85%), Dongzhu Ecological Environment Protection Co.Ltd(603359) (- 14.57%), Tianyu Eco-Environment Co.Ltd(603717) (- 22.60%).
Industry valuation. From the perspective of the overall P / E ratio of the industry, as of March 18, the P / E ratio (TTM) of the architectural decoration industry was 10.86 times and the industry P / B ratio (MRQ) was 0.95 times, which was lower than that of last week. Compared with the SW primary industry, PE in the construction industry ranks fifth from bottom, higher than coal, steel, real estate and banking; Pb valuation ranks the third lowest in all primary industries, higher than real estate and banks. The current industry's lowest price earnings ratio (TTM) is top 5 Shaanxi Construction Engineering Group Corporation Limited(600248) (3.29), China Railway Construction Corporation Limited(601186) (4.03), China State Construction Engineering Corporation Limited(601668) (4.05), China Railway Group Limited(601390) (5.24), Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (5.90); The top 5 lowest price to book ratio (MRQ) are China Railway Construction Corporation Limited(601186) (0.55), Shenzhen Grandland Group Co.Ltd(002482) (0.63), Beijing Orient Landscape & Environment Co.Ltd(002310) (0.66), Misho Ecology & Landscape Co.Ltd(300495) (0.68), China Railway Group Limited(601390) (0.70).
Industry dynamic analysis
This week, the Bureau of statistics released the fixed investment data 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%, of which the year-on-year growth rate of narrow infrastructure investment was as high as 8.1%, 4.95 PCT higher than the two-year average growth rate (3.15%) from 2019 to 2021. After calculation, the year-on-year growth rate of broad infrastructure investment during the period was as high as 8.69%. In terms of infrastructure sub sectors, in addition to the railway transportation industry, other sub sectors have achieved positive year-on-year growth. From January to February, the investment in water conservancy management industry and road transportation industry increased by 22.50% and 8.20% respectively, 13.15 PCT and 7.30 PCT higher than the average growth level in 20192021, or due to the accelerated construction of major water conservancy and transportation projects; The growth rate of investment in public facilities management industry was 4.30%, and the investment in railway transportation industry decreased by 8.00% year-on-year. The overall performance of infrastructure investment data from January to February is bright, or because the special bonds issued by 21q4 and 22q1 have been put into use, and the progress of major construction projects has been accelerated, which reflects the remarkable effect of the early steady growth policy to a certain extent.
At the level of capital supply, fiscal expenditure expanded, central transfer payments increased, and the issuance of special bonds accelerated. According to China's financial data from January to February, the national general public budget expenditure was 3822.7 billion yuan, a year-on-year increase of 7%, and the progress of budget expenditure was 14.3%, the highest in recent five years. The expenditure on people's livelihood and key areas was effectively guaranteed; In the first two months, the budget expenditure of national government funds was 1404.2 billion yuan, a year-on-year increase of 27.9%, which is related to accelerating the issuance of special bonds of local governments and supporting major infrastructure projects. From January to February, the fiscal expenditure maintained a high growth rate and the expenditure progress was fast, which reflected the vigorous fiscal policy and supported the stable operation of the economy.
At the industry level, the boom level of the construction industry increased significantly in February, and the market demand is expected to continue to release. At the micro level, four central enterprises have disclosed new orders signed from January to February, all of which have achieved positive year-on-year growth. We continue to be optimistic about the improvement in the growth rate of infrastructure investment in Q1 and the future performance of the "two new and one heavy" sector. We suggest paying attention to the central infrastructure enterprises and local infrastructure leading sectors, survey and design sectors, urban rail industry chain and high-quality targets of new power construction, as well as the fabricated buildings and building photovoltaic sectors whose prosperity is expected to continue to rise during the 14th Five Year Plan period.
On March 17, 2022, the national development and Reform Commission issued the key tasks for the development of new urbanization and urban-rural integration in 2022, which are related to the field of infrastructure and housing construction, including: 1) the renewal and transformation of Urban Aging gas and other pipelines and the improvement of flood control and drainage facilities. We will promote urban renewal in an orderly manner, transform the living conditions of 8.4 million old community residents, and adopt more market-oriented methods to promote the transformation of old factory areas in big cities; 2) Support qualified metropolitan areas to scientifically plan multi-level rail transit, make overall use of existing and new lines to develop intercity railways and municipal (suburban) railways, touch and arrange the "bottleneck roads" of national and provincial roads, and create a one hour commuter circle; 3) Expand the supply of affordable rental housing and increase the proportion of affordable rental housing land in residential land; 4) In the future, we will actively explore and implement the market entry system of rural collectively operated construction land.
According to the specific tasks and instructions mentioned in this document, pipe network reconstruction, old residential area reconstruction, urban rail construction, affordable housing construction, etc. will become the focus of new urbanization construction in 2022. At present, the key areas for the coordinated development of cities and towns in China mainly include the integration of the Yangtze River Delta, the construction of Guangdong Hong Kong Macao Bay area, Beijing Tianjin Hebei, Chengdu Chongqing dual city economic circle and the central and Western and rural areas with obvious demand for short board, Generally speaking, it has a wide geographical distribution and strong construction demand.
It is suggested to pay attention to: 1) the Architectural Survey and design companies and local engineering contracting enterprises that benefit from the transformation of old residential areas have higher requirements for planning and design for the transformation and upgrading projects of large communities or cultural blocks due to the scattered location of old residential areas and the relatively limited volume and scale of single buildings, which are mostly carried out in EPC mode, Design companies and municipal / housing construction enterprises mainly engaged in urban planning / housing survey and design may benefit from the above urban reconstruction market; 2) At present, the materials of urban gas, water supply, drainage and heating pipelines in many regions of China are backward, the service life is long, there are potential safety hazards in the operating environment, and the demand for renewal and transformation is strong. The target of high-quality pipes for the layout of municipal pipe network business is expected to fully benefit; 3) Affordable housing is one of the key construction sectors in China during the 14th Five Year Plan period. Promoting the construction of affordable housing is an important measure for the structural reform of the housing supply side. It is preliminarily planned to add 6.5 million units (rooms) in 40 key cities, with sufficient construction space; 3) The design, construction and vibration and noise reduction targets of urban rail industrial chain are expected to benefit from the construction of metropolitan area on the track.
Investment suggestions this week:
At present, steady growth continues to increase, fiscal expenditure has increased, infrastructure investment data are bright, and policy implementation has begun to show results. The demand for two new and one heavy construction in the construction industry is clear, local construction plans are huge, and capital supply is relatively sufficient. This week, we continue to recommend high-quality infrastructure targets benefiting from the "two new and one heavy" under the goal of steady growth. At the same time, we suggest paying attention to high-quality targets benefiting from the development of affordable housing, prefabricated buildings and BIPV High quality targets in the new electric power sector include: 1) China State Construction Engineering Corporation Limited(601668) themain beneficiaries of the improvement of industry concentration; 2) China Design Group Co.Ltd(603018) , Anhui Transport Consulting & Design Institute Co.Ltd(603357) , high-quality survey and design targets at the front of the industrial chain, give priority to the steady growth of infrastructure and the high growth of infrastructure demand in the province during the 14th five year plan; 3) Shenzhen Capol International&Associatesco.Ltd(002949) , the leader of prefabricated building design, benefited from the release of demand for prefabricated building construction during the 14th Five Year Plan period; 4) Guangzhou Metro Design & Research Institute Co.Ltd(003013) , Zhejiang Tiantie Industry Co.Ltd(300587) , respectively, are leading enterprises in urban rail design and urban rail vibration reduction. They have a solid industry position, strong technical and brand strength and high performance, and fully benefit from the release of urban rail construction demand under the promotion of new infrastructure. 4) New power construction. Under the background of new power system construction with new energy as the main body, construction enterprises involved in the field of power construction are expected to benefit from the improvement of power grid investment and construction, operation and maintenance demand, and the release of BIPV and energy storage demand. It is recommended that Suwen Electric Energy Technology Co.Ltd(300982) , the leader of power construction and operation on the user side, and Zhejiang Southeast Space Frame Co.Ltd(002135) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Tus-Design Group Co.Ltd(300500) .
Industry investment perspective
In 2022, the construction industry is expected to usher in multiple development opportunities of fundamentals, policy driven and "construction +", and the industry is in the undervalued range, with prominent investment value. The overall fundamentals of the construction industry are improving. In particular, the rapid growth of orders from central infrastructure enterprises and local infrastructure leaders will help improve performance. It will take the lead in benefiting from the release of infrastructure demand under the goal of stable growth. At the same time, it will actively layout new businesses, improve comprehensive strength and help valuation repair. The policy is expected to become another driving force for the "spring agitation" of the industry in 2022. In the near future, the steady growth policy will continue to increase, the active fiscal policy should improve the efficiency, the local special debt can be launched within a certain period, the monetary policy should be flexible and appropriate, and the liquidity should be reasonable and abundant. There are expectations of reducing reserve requirements and interest rates in 2022, and the loose monetary policy is conducive to the development of the industry. The "two new and one heavy" construction is expected to increase, and the infrastructure investment is moderately ahead of schedule, which is worth looking forward to. The construction industry actively embraces the "new economy" and actively arranges Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) . BIPV, energy storage and carbon sequestration have become the key areas of layout of listed companies. Some companies Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) have achieved initial results and are expected to continue to make efforts in the future to help improve the valuation level of companies and industries. Industry leaders and regional leaders will continue to cultivate traditional businesses, expand the whole industrial chain and extend upstream and downstream around traditional businesses, and fully benefit from the improvement of industry concentration. The release of future performance is sustainable. On the whole, the construction industry has both "white horse" with good performance and extremely low valuation, and "dark horse" with layout of "building +" and standing at the market outlet. The overall trend of the industry is good, with fundamental support and policy catalysis. In addition, the "building +" helps to improve the valuation and is optimistic about the overall trend of the construction industry in 2022.
Suggestions on medium and long-term configuration
The overall fundamentals of the construction industry have improved. Industry leaders and regional leaders have benefited from the "national advance and people retreat" and the improvement of industry concentration. Both newly signed orders and performance have increased rapidly. At the same time, the construction industry actively embraces the "new economy" and the "construction +" era is coming, opening up the future development space of the company. On the main line of configuration, we propose to actively layout the "construction +" new business sector around the "two new and one heavy" infrastructure leaders and the "double carbon" background:
(1) "two new and one heavy" infrastructure leader. Central construction enterprises and regional infrastructure leaders will fully benefit from "two new and one heavy" construction, and central construction enterprises and regional infrastructure leaders will fully benefit from the "two new and one heavy" construction. And central construction enterprises and regional infrastructure leaders are the main beneficiaries of "the country advances, the people retreat, the industry concentration increases, and the industry concentration increases. The new orders and performance are bright, and the valuation advantage is quite significant. It's suggested to focus on China State Construction Engineering Corporation Limited(601668) \ the valuation advantage is obvious. The new orders and performance and valuation advantage is very obvious. It's obvious valuation advantage is obvious. It's recommended to focus on China State Construction Engineering Corporation Limited(601668) andother regional infrastructure leaders. At the same time, urban rail design and vibration reduction will fully benefit from the release of urban rail transit demand under the construction of new urbanization. Guangzhou Metro Design & Research Institute Co.Ltd(003013) and Zhejiang Tiantie Industry Co.Ltd(300587) .
(2) high quality target of infrastructure survey and design China Design Group Co.Ltd(603018) , Anhui Transport Consulting & Design Institute Co.Ltd(603357) , the front end of the industrial chain gives priority to benefiting from the release of infrastructure demand under the goal of steady growth. During the 14th Five Year Plan period, the planned infrastructure investment scale of many provinces increased significantly, the contracting advantage of leading orders of high-quality design was significant, and the market share could be increased in time.
(3) pumped storage beneficiary company. With the change of energy structure, power supply security has been put on the agenda, and energy storage has become the main means to solve power security. As the most important way of energy storage, pumped storage has been strongly supported by national policies. In the future, pumped storage will enter a stage of rapid growth and encourage social capital to enter. Water conservancy and hydropower engineering enterprises own the construction and operation of pumped storage projects, and most of them have hydropower operation assets. It is possible to layout pumped storage power stations, which is expected to fully benefit the development of pumped storage in the future. Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Guangdong No.2 Hydropower Engineering Company Ltd(002060) and Anhui Construction Engineering Group Corporation Limited(600502) .
(4) prefabricated buildings. We believe that under the background of carbon peak and carbon neutralization goal, the prefabricated construction field mainly in the form of concrete structure and steel structure will continue to fully benefit from the further improvement of the industry prosperity and the release of demand, and is expected to become an important development field under the carbon neutralization goal. It is suggested to pay attention to Shenzhen Capol International&Associatesco.Ltd(002949) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Zhejiang Southeast Space Frame Co.Ltd(002135) .
(5) new power construction. In the context of the construction of new electric power systems with new energy as the main body, under the backdrop of new energy as the main body, building companies involved in power construction are expected to benefit from grid investment and construction and operation and operation and operation and maintenance needs, BIPV and energy storage demand releases, BIPV is expected to benefit from the backdrop of new energy as the building of new power systems, as the backdrop of a new power system with new energy as the main body. Building companies involved in the field of power construction are expected to benefit from grid investment, construction and operation and maintenance, enhanced demand for operation and maintenance, enhanced BIPV and release of BIPV and energy storage demand. Recommend the consumer side power construction and operation leader Suwen Electric Energy Technology Co.Ltd(300982) Suwen Electric Energy Technology Co.Ltd(300982) \ \359.
Risk tips: epidemic control is not as expected, policy implementation is not as expected, economic downside risk, PPP promotion is not as expected, fixed asset investment is declining, local financial growth is slow, etc
