Weekly market of construction industry
The industry rose and fell in the week. This week (4.6-4.8), the building decoration industry (SW) rose 6.06%, stronger than the performance of Shanghai Composite Index (- 0.94%), Shanghai and Shenzhen 300 (- 1.06%) and Shenzhen Component Index (- 2.20%). The weekly increase ranked first among the 31 primary industries of SW, and the industry ranking Rose 14 compared with last week (15th). In terms of molecular sectors, the basic municipal engineering (8.65%), housing construction (7.53%), engineering consulting services (6.03%), International Engineering (4.28%) and steel structure (3.78%) sectors achieved large increases, and the decoration sector showed the weakest performance (1.86%).
Performance of individual stocks in a week. This week, a total of 108 companies in CITIC construction industry recorded an increase, accounting for 74%; The number of companies that rose more than the industry index (6.06%) this week was 52, accounting for 36%. The construction industry recorded an increase this week. The number of companies increased compared with last week, and the number of companies that outperformed the industry rose this week decreased compared with last week. The top 5 gainers of the industry are Shenzhen Strongteam Decoration Engineering Co.Ltd(002989) (33.14%), Xinjiang Beixin Road & Bridge Group Co.Ltd(002307) (33.08%), Xinjiang Communications Construction Group Co.Ltd(002941) (27.16%), Hualan Group Co.Ltd(301027) (23.38%), Qingdao East Steel Tower Stock Co.Ltd(002545) (21.45%); The top 5 industry declines this week were Suwen Electric Energy Technology Co.Ltd(300982) (- 8.85%), Shanghai Fengyuzhu Culture Technology Co.Ltd(603466) (- 9.47%), Guangdong No.2 Hydropower Engineering Company Ltd(002060) (- 9.89%), Shanghai Nenghui Technology Co.Ltd(301046) (- 10.46%), Zhejiang Construction Investment Group Co.Ltd(002761) (- 15.86%).
Industry valuation. From the perspective of the overall P / E ratio of the industry, as of April 8, the P / E ratio (TTM) of the architectural decoration industry was 11.40 times and the industry P / B ratio (MRQ) was 1.01 times. The P / E ratio and P / B ratio of the industry increased compared with last week. Compared with the SW primary industry, PE in the construction industry ranks fifth from bottom, higher than real estate, coal, steel and banking; Pb valuation ranks the penultimate in all primary industries, higher than that of banks. The current industry’s lowest price earnings ratio (TTM): Top 5 Shaanxi Construction Engineering Group Corporation Limited(600248) (3.69), China Railway Construction Corporation Limited(601186) (4.65), China State Construction Engineering Corporation Limited(601668) (4.97), China Railway Group Limited(601390) (6.06), Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (6.82); The lowest price to book ratio (MRQ) is ST Meishang (0.53), China Railway Construction Corporation Limited(601186) (0.56), Beijing Orient Landscape & Environment Co.Ltd(002310) (0.63), Shenzhen Grandland Group Co.Ltd(002482) (0.70), China Communications Construction Company Limited(601800) (0.72).
Industry dynamic analysis
This week (4.6-4.8), the market performance of the construction sector was strong, of which the infrastructure and housing construction sub sectors increased by more than 7%. Since the beginning of 2022, the tone of steady growth has been clear, and many ministries and commissions have repeatedly emphasized and recommended the construction progress of major projects. Recently, due to the epidemic factors, the construction progress of projects in many places may be less than expected. In order to hedge the impact of the epidemic on investment, the steady growth policy is expected to increase again, and the growth rate of infrastructure investment in the first half of the year is expected.
At the micro level, the orders of central construction enterprises from January to February achieved positive year-on-year growth, the scale of new major project contracts signed by local state-owned enterprises increased rapidly, 22q1 orders of some central enterprises increased sharply, and high-quality leaders were basically good. We continue to be optimistic about the follow-up market performance of the construction industry. We still suggest to focus on the “two new and one heavy” infrastructure leaders, including central construction enterprises, regional infrastructure leaders and high-quality targets of infrastructure survey and design.
At the same time, the marginal improvement policy of the real estate industry continues, and the favorable policy expectation in the future is relatively strong. The high-quality central enterprises and local state-owned enterprises that layout the real estate business usher in the valuation repair, and the market performance of the real estate chain design, decoration and consumer building materials sector is better. We believe that the short-term performance is more the beta market that follows the real estate industry policy to relax the valuation repair. In the medium and long term, the performance is reversed, the cash flow is excellent In companies with sufficient orders, the action force is still sufficient.
At the regular policy briefing of the State Council this week, the Vice Minister of Water Resources said that another batch of projects that have been included in the plan and have mature conditions will be started in 2022, including major water diversion and transfer projects such as the follow-up project of the South-to-North Water Transfer, backbone flood control and disaster reduction, danger removal and reinforcement of dangerous reservoirs, construction and reconstruction of irrigation areas, etc. These projects, together with other water conservancy projects, can complete an investment of about 800 billion yuan in the whole year. The national development and Reform Commission said it would take multiple measures to expand investment in water conservancy projects, actively and orderly promote project construction, and promote the full play of the important role of major water conservancy projects in stabilizing investment and expanding domestic demand.
This year, China’s investment in water conservancy construction grew strongly. According to the fixed asset investment data of the Bureau of statistics from January to February, the investment in water conservancy management industry increased by 22.5% year-on-year from January to February. From January to March, the national water conservancy investment reached 107.7 billion yuan, a year-on-year increase of 35%. Major water conservancy projects attract large investment, long industrial chain and create many employment opportunities. They play an important role in ensuring national water security, promoting regional coordinated development, stimulating effective investment demand and promoting stable economic growth. According to the information of the Ministry of water resources, every 100 billion yuan invested in major water conservancy projects can drive GDP growth by 0.15 percentage points and create 490000 new jobs. Therefore, the completion of 800 billion yuan of water conservancy investment this year will play a significant role in doing a good job of “six stabilities” and “six guarantees” and stabilizing the macro-economic market. There are a large number of major water diversion projects in the 14th five year plan. This year, we will focus on two aspects: first, promote the high-quality development of the follow-up project of the South-to-North Water Diversion, and focus on the preliminary work of the middle line water diversion project to ensure the commencement of construction within the year. At the same time, we should deepen the preliminary demonstration of the follow-up project of the east line of the South-to-North Water Transfer Project and promote the timely construction of the project; Second, comprehensively promote other major water diversion projects. For those with basically mature conditions, accelerate the commencement and construction of the project. The water conservancy sector welcomes the development dividend again, and the scale of water conservancy investment and project construction progress in the future are considerable. It is suggested to pay attention to the high-quality project targets Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Anhui Construction Engineering Group Corporation Limited(600502) .
Investment advice this week
At present, the tone of steady growth is clear, fiscal expenditure is increased, infrastructure investment data from January to February are bright, policy implementation has achieved initial results, the demand for two new and one heavy construction in the construction industry is clear, local construction plans are huge, capital supply is relatively sufficient, and the follow-up steady growth is expected to continue to increase. This week, we continue to recommend high-quality infrastructure targets benefiting from the “two new and one heavy” under the steady growth goal, At the same time, it is suggested to pay attention to the design, decoration and real estate construction companies related to the real estate chain that benefit from the marginal improvement of the policies of the real estate industry. In addition, there are sufficient orders on hand in the early stage and the performance of 22q1 exceeds the expectation. The performance of the company is worth looking forward to. include:
1) China State Construction Engineering Corporation Limited(601668) , China Communications Construction Company Limited(601800) , China Railway Construction Corporation Limited(601186) , Metallurgical Corporation Of China Ltd(601618) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) and other central construction enterprises, Shandong Hi-Speed Road&Bridge Co.Ltd(000498) , Anhui Construction Engineering Group Corporation Limited(600502) and other regional infrastructure leaders, with excellent order performance and significant valuation advantages, are the main force to increase infrastructure and the main beneficiaries of steady growth and moderate 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 real estate design, benefited from the marginal improvement of policies in the real estate industry and 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, with stable industry status, strong technical and brand strength and high performance, fully benefiting from the release of urban rail construction demand under the promotion of new infrastructure;
2022 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 upward trend 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 expected, the monetary policy should be flexible and appropriate, and the liquidity should be reasonable and abundant, which will help promote the construction of “two new and one heavy”, and the acceleration of infrastructure investment is worth looking forward to.
The construction industry actively embraces the “new economy” and actively layout 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 leaders. 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
