[core view of this week] in view of the new situation encountered by the economy, the national standing committee meeting last week focused on “holding firm to the goal, placing stable growth in a more prominent position, and stabilizing the economic policies early and fast, and not taking measures that are not conducive to stabilizing market expectations”, highlighting the urgency of stabilizing growth after the recovery of the epidemic. It is expected that the follow-up policies in all aspects will be accelerated and the strength is expected to be further strengthened. We continue to be firmly optimistic about the main line of steady growth. Under the impact of the epidemic, the follow-up infrastructure and real estate policies are expected to increase. Considering the factors of policy support, rush work after the epidemic and low base in the second half of last year, the fundamentals of the construction industry are expected to improve significantly in the second half of last year, which is expected to drive the expansion of sector valuation, It is recommended to focus on the undervalued construction central enterprises China State Construction Engineering Corporation Limited(601668) (this month’s gold stock, the core beneficiary of the steady growth of infrastructure real estate, the high-quality assets of CNOOC real estate need to be revalued, pe4.3x), China Railway Group Limited(601390) (pe4.9x), China Communications Construction Company Limited(601800) (pe7.0x), China Railway Construction Corporation Limited(601186) (pe3.8x), as well as the high growth local state-owned enterprises Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (pe4.8x). The manufacturing chain mainly recommends China National Chemical Engineering Co.Ltd(601117) (the production progress of hexanediamine is higher than expected, and the future project is expected to maintain high profitability), and the leader of mechanical equipment leasing Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) (pe16x). In addition, the general code for building energy conservation and renewable energy utilization will be officially implemented on the 1st of this month. The mandatory code is expected to accelerate the development of various subdivided industries of green buildings. It is recommended to focus on the steel structure leaders Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) (pe11x), Anhui Honglu Steel Construction(Group) Co.Ltd(002541) (pe15x), the microgrid leaders Acrel Co.Ltd(300286) (pe24x) benefiting from the rapid development of photovoltaic buildings and green construction methods Distribution network EPCO faucet Suwen Electric Energy Technology Co.Ltd(300982) (pe20x), heating energy saving transformation faucet Runa Smart Equipment Co.Ltd(301129) (pe17x).
The epidemic has repeatedly impacted the economy, and policies are expected to be further strengthened, firmly optimistic about the main line of steady growth. Since March, China’s epidemic has rebounded, with more than 103000 cases of local infections reported in a single month, affecting 29 provinces, and large-scale closure and control in key economic cities such as Shanghai and Shenzhen, which has had a significant impact on the economy. In view of the new situation encountered by the economy, the national standing committee meeting this week focused on putting forward: “maintaining the stable operation of the economy in the first quarter and the first half of the year is very important to achieve the annual goal. We should strengthen confidence, stick to the goal, put stable growth in a more prominent position, and the policies to stabilize the economy should be carried out early and quickly, rather than measures that are not conducive to stabilizing market expectations.” The statement of the national Standing Committee highlights the urgency of stabilizing growth at present. It is expected that the follow-up policies in all aspects will be accelerated and the intensity is expected to be further increased. Especially when the impact of the epidemic on consumption is obvious, investment is expected to significantly increase its contribution to the economy this year. Therefore, infrastructure and real estate are still the core direction of subsequent steady growth. In terms of infrastructure: the national standing committee emphasizes accelerating the issuance of special bonds. The quota issued this year will be completed by the end of September to support new infrastructure, reasonably expand the scope of use, speed up the construction of projects and form a physical quantity as soon as possible. The national development and Reform Commission recently organized an inter ministerial joint meeting and proposed to accelerate the implementation of 102 major projects in the 14th five year plan. Considering the low infrastructure investment base in the second half of last year and the expected acceleration of construction enterprises after the epidemic, infrastructure investment is expected to remain high in the second half of this year. In terms of real estate: Recently, the six ministries and commissions have actively stated to stabilize the real estate, and the policy confidence has been strongly boosted. Considering the wide correlation between the real estate industry and the economy, it is expected to be one of the focus of the follow-up steady growth policy. The real estate policy is expected to continue to relax and the intensity is expected to increase. In particular, it may make efforts on the demand side and real estate financing side to promote the continuous improvement of industry fundamentals.
We continue to be firmly optimistic about the main line of steady growth. Under the impact of the epidemic, the follow-up infrastructure and real estate policies are expected to increase. Considering the factors of policy support, rush work after the epidemic and low base in the second half of last year, the fundamentals of the construction industry are expected to improve significantly in the second half of last year, which is expected to drive the valuation expansion of the sector. Focus on recommending the central enterprises China State Construction Engineering Corporation Limited(601668) , China Railway Group Limited(601390) , China Communications Construction Company Limited(601800) , China Railway Construction Corporation Limited(601186) and local state-owned enterprises with high growth Shandong Hi-Speed Road&Bridge Co.Ltd(000498) , Sichuan Road & Bridge Co.Ltd(600039) .
The real estate sector rose sharply in a row. It is recommended to pay attention to real estate construction enterprises, and the core recommendation is China State Construction Engineering Corporation Limited(601668) . On March 16, after six ministries and commissions actively stated to stabilize real estate and boost confidence in real estate policies, the real estate sector ushered in a sharp rebound. From March 16 to April 1, CITIC Real Estate Index rose by 29.2%. Real estate development is also one of the main businesses of some construction enterprises. It is suggested to focus on the repair opportunities of construction enterprises with large real estate business profits and low valuation. We’ve combed the building enterprises with larger real estate business scale, among which China State Construction Engineering Corporation Limited(601668) .
Policies promote the development of photovoltaic buildings, and steel structure leaders welcome the growth of BIPV / bapv. This week, the National Energy Administration issued the guiding opinions on energy work in 2022, requiring “continue to implement the development and construction of roof distributed photovoltaic in the whole county” and “make full use of the land and roof resources of oil and gas mining areas, industrial and mining areas and industrial parks to develop distributed wind power and photovoltaic”. At the same time, the general code for building energy conservation and renewable energy utilization issued by the Ministry of housing and urban rural development will be officially implemented on January 1, which proposes that ” Cecep Solar Energy Co.Ltd(000591) system shall be installed in new buildings”. The code is a mandatory engineering construction code, and all provisions must be strictly implemented. On the whole, this year’s photovoltaic construction policies are intensive and the promotion is strong. It is expected that the follow-up BIPV / bapv industry is expected to increase significantly, and the industry leader is expected to accelerate the growth. According to the information publicly disclosed by listed construction companies, the current steel structure leading enterprises continue to accelerate the layout of photovoltaic construction business: 1) Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) : it is proposed to invest in the establishment of a professional subsidiary Seiko green carbon solar energy technology, which will become the main body of the company’s professional provision of distributed photovoltaic power station construction in the future; A cooperation agreement was signed with Risen Energy Co.Ltd(300118) to cooperate in the research and development of BIPV products, product procurement, business cooperation and promotion, and BIPV business development continued to make positive progress. 2) Center International Group Co.Ltd(603098) : it is proposed to acquire Longji green energy photovoltaic engineering company under Longji in the near future to solve the problem of horizontal competition. In the future, the construction photovoltaic projects undertaken in the field of Longi Green Energy Technology Co.Ltd(601012) metal enclosure will be implemented by the company, which is conducive to concentrating advantageous resources and accelerating the development of BIPV business. 3) Zhejiang Southeast Space Frame Co.Ltd(002135) : recently signed a 770 million EPC contract with Zhejiang Southeast Space Frame Co.Ltd(002135) group. The project plans to adopt the construction method of “prefabricated steel structure + BIPV photovoltaic building integration” to build ultra-low energy consumption / near zero energy consumption buildings; At the same time, the company won the bid for the EPC project of Xiaoshan Xidian Electronic Technology Industrial Park with a scale of 3.9 billion yuan, accounting for 35% of the revenue in 2021. Among them, the roof and other enclosure systems will also adopt the BIPV construction mode.
Since last year, the company has continuously obtained large orders for BIPV business, and the subsequent BIPV revenue is expected to accelerate the volume.
China National Chemical Engineering Co.Ltd(601117) : the production progress of hexanediamine is faster than expected, and the project is expected to maintain high profitability in the future. The company announced that on March 31, the hexanediamine unit of Tianchen Qixiang nylon new material project was successfully started at one time, and the unit successfully produced the first batch of qualified products, and the product quality reached high-grade products. The progress was faster than the output time in early April, which exceeded the expectation. Since most of the profits in the nylon 66 industrial chain are concentrated in the butadiene adiponitrile hexamethylene diamine link, and there is no public quotation for adiponitrile, for the sake of simplification, we assume that the external sales product after the expiration of the project is 300000 tons of hexamethylene diamine (excluding the profits of acrylonitrile and other products and the profits of hexamethylene diamine nylon 66 link). According to our calculation, according to the current raw material price, the raw material cost per ton of adiponitrile of the company is about 11839 yuan / ton. After considering hydrogenation, the raw material cost per ton of hexanediamine is about 13839 yuan / ton, and the sales price of hexanediamine corresponding to the break even point is 18000 yuan / ton (the current price is about 50000 yuan / ton), which has a large profit space. Assuming that the external sales price of hexanediamine is 30000 yuan / ton, the first phase of the project can achieve an operating income of 9 billion yuan, an after tax profit of 2.76 billion yuan, a net profit attributable to the parent of 2.07 billion yuan, and a net interest rate attributable to the parent of 23%, with strong profitability. As NVIDIA Shanghai’s new 400000 ton adiponitrile project is expected to be put into operation slower than the market expectation due to the epidemic and other reasons, the current main adiponitrile production capacity in Europe is affected by the natural gas shortage caused by the situation in Russia and Ukraine, while the downstream nylon 66 polymerization production capacity in China is growing rapidly. Therefore, it is expected that the price of the company’s adiponitrile and other products is expected to remain high this year, and the project profit is expected to exceed the expectation. The company’s new material projects have been solidly promoted. The “14th five year plan” has made clear the determination of industrial development, accelerated the revaluation of the second growth curve and continued to focus on recommendations.
Investment suggestion: we continue to be firmly optimistic about the main line of steady growth. Under the impact of the epidemic, the follow-up infrastructure and real estate policies are expected to increase. Considering the factors of policy support, rush work after the epidemic and low base in the second half of last year, the fundamentals of the construction industry are expected to improve significantly in the second half of last year, which is expected to drive the valuation expansion of the sector. It is recommended to focus on the central enterprises China State Construction Engineering Corporation Limited(601668) , China Railway Group Limited(601390) , China Communications Construction Company Limited(601800) , China Railway Construction Corporation Limited(601186) and local state-owned enterprises with high growth Shandong Hi-Speed Road&Bridge Co.Ltd(000498) . The manufacturing chain recommends China National Chemical Engineering Co.Ltd(601117) , the leader of mechanical equipment leasing Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) . In addition, the mandatory code for building energy conservation will be officially implemented on April 1, which is expected to accelerate the development of the green building industry. It is recommended to focus on the steel structure leaders Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , microgrid leaders Acrel Co.Ltd(300286) , distribution network EPCO leaders Suwen Electric Energy Technology Co.Ltd(300982) , heating energy-saving transformation leaders 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.
