Key investment points:
In the first quarter of 2022, the policy continued to release positive effects on infrastructure investment. In the history of recovery, the three large increases in infrastructure investment since 2004 are often related to active fiscal policies. The 2022 government work report pointed out that the deficit rate is planned to be arranged at about 2.8% this year, and the central transfer payment to local governments will increase by 1.5 trillion yuan, with a scale of nearly 9.8 trillion yuan, the largest increase in many years, which shows the government's determination to "stabilize growth" and the government's strong willingness to invest.
In the first quarter of 2022, the financial sector made great efforts to lay a solid foundation for the implementation of subsequent infrastructure projects. At present, monetary policy is carried out in three aspects: stability, flexible adjustment and appropriate volume and price. After the gold stability Commission was held on March 16, the central bank, CSRC and CBRC made a rapid and positive statement. In the follow-up, if the economic situation, especially the real estate situation, deteriorates significantly, the monetary policy is expected to be further relaxed.
From the perspective of special debt, the pace accelerated significantly in the first quarter of this year, and infrastructure is still an important investment direction. In the first quarter of 2022, China issued a total of 1298.1 billion new special bonds, accounting for 89% of the amount approved in advance (1.46 trillion), accounting for 36% of the annual issuance plan, higher than 31% and 29% in the same period of 2019 and 2020. In the follow-up, on March 30, the national Standing Committee required the issuance of 1460 billion yuan of new special bonds issued by local governments in advance last year to be completed by the end of May, and the 3650 billion yuan issued this year to be completed by the end of September.
From the perspective of macro investment, the total investment in major projects in various provinces and cities increased steadily over the previous year, with infrastructure construction and industrial development projects as the focus of investment. We have counted the 24 provinces (autonomous regions) that have announced the investment plan of major projects in 2022 by the beginning of April. Among them, the total investment of 16 provinces (autonomous regions) that disclosed the total investment in 2022 exceeded 50 trillion, an increase of 20% over the total investment of the same provinces in 2021; The planned investment of major projects in 24 provinces (autonomous regions) in 2022 reached 12.68 trillion, an increase of 12% over 2021.
From the micro level, the orders of central construction enterprises remain resilient. As of February 2022, the cumulative growth rates of newly signed contracts in China State Construction Engineering Corporation Limited(601668) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Metallurgical Corporation Of China Ltd(601618) , China National Chemical Engineering Co.Ltd(601117) were 6.70%, 1.67%, 14.6% and 87.53% respectively China Railway Group Limited(601390) recently announced that the amount of newly signed orders in the first quarter of 2022 reached 605.7 billion yuan, a significant increase of 84% year-on-year.
The impact of the epidemic has brought short-term disturbance. Under pressure, we look forward to the follow-up landing force. In March, affected by repeated epidemics in some areas, the PMI index of the construction industry fell slightly, and the pressure for steady growth appeared, which also provided a certain opportunity for the follow-up infrastructure development. In March, the growth rate of excavator sales decreased by 53.1% year-on-year, but the operating hours of excavators in February this year have formed a positive growth rate. From 2022 to now, the operating rate of petroleum asphalt plant has recovered, with the operating rate of 26.52% in March, a slight increase of 1.2 percentage points month on month. From the perspective of power generation from January to February 2022, the base is still 4% higher than that in the same period last year, reflecting that the macro demand may still be better.
Overall, the macro-economy in the first quarter of 2022 faces great challenges. The epidemic and external factors bring short-term disturbances, which may affect the recovery pace of infrastructure investment. However, due to the forward development of finance, the overall macro liquidity is relatively abundant. In the second year of the 14th five year plan, provinces and cities actively carry out major project investment and strive to maintain the goal of "stable growth". With the subsequent epidemic gradually controlled, the demand for infrastructure investment is expected to exceed expectations in the second quarter and usher in substantial improvement in the peak season of the third quarter. It is suggested to pay attention to the "two new and one heavy" infrastructure leaders, as well as the high-quality design consulting companies upstream of the infrastructure industry chain that are expected to take the lead in improving the accounting statements.
Risk factors: the impact of the epidemic exceeded expectations; The policy strength is less than expected; The project funds are not in place, etc.
