Micro data verify the prosperity of infrastructure, and energy infrastructure, water conservancy, pipe network investment and other fields are expected to accelerate
China Railway Group Limited(601390) disclosed the operating data of the first quarter. In 2022q1, the newly signed contracts of the company increased by 84% year-on-year, achieving a “good start”. Among them, the newly signed orders for infrastructure construction, survey, design and consulting services increased by 94.1% and 157.5% year-on-year, accounting for 89.7% of the infrastructure orders, which boosted the overall order growth. 22q1 national railway fixed asset investment reached 106.5 billion yuan, a year-on-year increase of 3.1%. 447 kilometers of new railway lines were opened, including 233 kilometers of high-speed railway. In the first quarter, the national railway infrastructure investment was over completed. The micro data verified our previous view that Q1 infrastructure is expected to maintain a high boom. We believe that the main line of steady growth will continue. In subdivided regions such as Shandong, Sichuan and Chongqing, energy infrastructure (pumped storage, green power, etc.), water conservancy, pipe network investment Major transportation and other segments are expected to show good growth sustainability and elasticity.
The pace of increasing the investment of local major projects was advanced, and the judgment of 4 ~ 5% of the annual capital construction was maintained
In 2022, in order to help steady growth and achieve a good start to the economy, all provinces started the centralized construction of major projects in advance. After new year’s day, Shandong, Anhui, Jiangsu, Jiangxi, Hunan and other provinces began to promote the centralized construction of major projects, so as to achieve stability, make progress while maintaining stability and give full play to the key role of investment. Despite the repeated impact of the epidemic recently, we judge that the subsequent steady growth is still expected to increase. Considering that the actual demand may become the main line of the development of the 14th Five Year Plan period and the significant characteristics of structure and regionalization, we maintain the growth judgment of 4% ~ 5% of the annual growth of infrastructure.
Continued favorable policies are expected to boost market confidence and drive the repair of sector valuation
In March, Zhengzhou, Harbin and Fuzhou successively issued documents or statements to adjust the loan restriction, purchase restriction or sale restriction policies, becoming the first provincial capital cities to adjust the restrictive policies of real estate. According to the statistics of Zhuge housing search data research center, by the end of March, more than 70 cities across the country had adjusted the policies related to real estate, and the adjustment direction involved adjusting the purchase and sale restriction, reducing the down payment ratio, increasing the loan amount of provident fund, reducing the mortgage interest rate Payment of house purchase subsidies and other aspects. Affected by multiple factors such as the epidemic situation, market expectations and the fundamentals of real estate enterprises, the real estate industry is still at a “trough”. We believe that more cities will follow up and optimize restrictive policies in the future. The real estate policy is expected to continue to boost the market’s confidence in the real estate chain and drive the valuation repair of the sector.
Market Review
Last week, the construction (CITIC) index rose by 2.17% and the CSI 300 index rose by 2.94%. In the three sub sectors, except for construction and decoration, all the three sub sectors rose, of which housing construction and infrastructure recorded positive earnings of 4.87% and 2.99% respectively. Among individual stocks, Lets Holdings Group Co.Ltd(002398) (+ 14.89%), Beijing Qianjing Landscape Co.Ltd(603778) (+ 13.79%), Shenzhen Jianyi Decoration Group Co.Ltd(002789) (+ 12.79%), Xinjiang Beixin Road & Bridge Group Co.Ltd(002307) (+ 11.84%), Chongqing Construction Engineering Group Co.Ltd(600939) (+ 10.55%) led the increase.
Investment advice
Under the medium and long-term growth dimension of “construction +” leader, enterprises with “new energy” and “chemical” industries have gradually entered the performance cashing period, and their performance is expected to grow high. Under the dimension of valuation restoration of value varieties, the leaders of local state-owned enterprises are expected to enjoy the high boom of regional infrastructure, and the profit elasticity brought by the improvement of operating efficiency has initially appeared. In the medium and long term, there are both opportunities for steady growth and report quality improvement. The increase of market share of central enterprises supports the continuous growth of revenue. After the completion of leverage reduction, roe still has obvious upward elasticity. With the continuous strengthening of the profit release ability and willingness of central enterprises, It also has strong elasticity of valuation and repair.
Risk tips: Infrastructure & real estate investment went down more than expected, new energy & chemical business expansion was less than expected, the concentration of assembled leaders was less than expected, and the progress of efficiency improvement in the reform of central enterprises and state-owned enterprises was less than expected.
