This week, the construction sector outperformed the market, and the construction segment generally rose. Shenzhen has issued green building regulations, which are to be implemented on July 1.
The overall rise of construction outperformed the market, and the segments generally rose: this week, the Shenwan construction index closed at 2201.5 points, up 1.6% month on week, outperforming the market. The industry’s average price to book ratio was 1.0 times, up slightly from last week. Segments generally rose, with civil construction rising by 2.9%, the largest increase; Construction machinery and electrical equipment fell 1.8%, the largest decline.
Shenzhen has issued green building regulations, which will be implemented on July 1: on March 28, the regulations on green building of Shenzhen Special Economic Zone was voted by the Standing Committee of Shenzhen Municipal People’s Congress and will be implemented on July 1, 2022. The planning and construction, operation transformation, performance evaluation and other aspects of green buildings in Shenzhen are strictly regulated in detail. This legislation is the first green building regulation in China to include industrial buildings and civil buildings into the scope of legislative adjustment, which stipulates that the construction and operation of new buildings in Shenzhen should meet the requirements of no less than one star of the green building standard; The construction and operation of large public buildings and office buildings of state organs shall meet the requirements of no less than two stars of the green building standard. In addition, the regulations also make relatively strict provisions in terms of planning, operation and performance. The energy consumption index of new public buildings shall not be higher than the average value of the binding value and guiding value of the current national and municipal building energy consumption standards, and the municipal competent department of housing construction can formulate local building energy consumption standards that are stricter than the national standards according to economic development and technological progress. From the perspective of the whole life cycle of buildings, the regulations clearly include the whole process of planning, construction, operation, transformation and demolition of green buildings into the scope of regulation adjustment. At the same time, they further strengthen the incentives and policy support, and promote the formation of endogenous power in the market.
Infrastructure investment continued to grow, and real estate investment picked up slightly: from January to February, fixed asset investment was 5.4 trillion, an increase of 12.2% year-on-year. Among them, the completed investment in infrastructure and real estate development was 1.3 trillion and 1.4 trillion respectively, with a year-on-year growth rate of 8.6% and 3.7% respectively. Infrastructure investment continued the growth trend in December, and the year-on-year growth rate was significantly improved; After four consecutive months of decline, real estate investment also ushered in signs of recovery. In infrastructure construction, the investment in power, transportation and public utilities was 0.21 trillion yuan, 0.48 trillion yuan and 0.57 trillion yuan respectively, with a year-on-year growth rate of 11.7%, 10.5% and 6.0% respectively. From January to February, the investment performance of the three sub projects was good, with a large year-on-year increase in power and transportation. The investment in public water conservancy also ended its continuous decline and ushered in growth. The main tone of steady growth in 2022 is expected to drive the continuous improvement of infrastructure investment.
Construction and completion fell year-on-year, and the decline of land transaction price was higher than that of transaction area: from January to February, the planned land transaction area of 100 large and medium-sized cities totaled 150 million square meters, a year-on-year decline of 26.7%; The average transaction floor price is 1386 yuan / square meter, with a decrease of 1273.5 yuan / square meter. The decline of transaction price is higher than that of transaction area. The construction, completion and sales areas were 150, 120 and 160 million square meters respectively, with a year-on-year growth rate of – 12.1%, – 9.8% and – 9.6% respectively. The year-on-year growth rate of new construction from January to February narrowed by 19.0 PCT compared with December 2021, mainly because most projects started construction at the beginning of the year; The completion growth rate dropped significantly compared with December, mainly because the beginning of the year was not the peak of completion, and real estate enterprises used limited funds for new projects. From January to February, the decline of commercial housing sales area narrowed, but the sales unit price decreased significantly, indicating that the current real estate sales situation is still poor, and the real estate easing policy needs to be further strengthened.
Key recommendation
Key recommendation: infrastructure sector, Shenzhen Capol International&Associatesco.Ltd(002949)
Main risks of rating
Risk tip: manufacturing investment slows down, assembly promotion is less than expected, and macro liquidity is tightened.
