This week (2022.4.6 – 2022.4.8, the same below): the architectural decoration sector (SW) rose or fell by 6.06% this week. In the same period, the CSI 300 and wandequan a index rose or fell by – 1.06% and – 1.74% respectively, and the excess return was 7.12% and 7.80% respectively.
Comments on important industrial policies, event changes and data tracking: (1) Li Keqiang presided over the Symposium of economic situation experts and entrepreneurs: the steady growth policy is expected to continue to increase. At the symposium, economic situation experts and entrepreneurs stated that “policies and measures need to be strengthened in advance and in time. What has been issued should be implemented in place as soon as possible, clarify what is to be launched as early as possible, and study and prepare new plans at the same time”. We believe that the possibility of the epidemic is higher than expected, which further increases the necessity of steady growth and risk prevention. (2) The general office of the Ministry of housing and urban rural development and the general office of the national development and Reform Commission required to do a good job in urban drainage and waterlogging prevention this year: the document focuses on making up for shortcomings in urban drainage and waterlogging prevention, It is proposed that “we should speed up the establishment of an urban drainage and waterlogging prevention engineering system of ‘source emission reduction, pipe network emission, storage and drainage simultaneously, and emergency response beyond the standard’, rely on the national major construction project library, implement the tasks in the standing book of major urban flood control and waterlogging projects in the 14th five year plan one by one into specific construction projects, and speed up the construction of a number of major projects”.
Zhou viewpoint
The epidemic may exceed expectations, making steady growth continue to increase. In the short term, under the pressure of centralized cashing in May and June, it is difficult to significantly accelerate the speed of real estate construction, and infrastructure needs to be strengthened to hedge against the economic downturn. The early fiscal revenue and expenditure and the issuance of special bonds reflect the continuous efforts of fiscal policies to ensure the capital side. The construction PMI, provincial investment plans and enterprise orders indicate that the pace of project implementation has been significantly accelerated. This round of policies focuses on supporting transportation, affordable housing projects, water conservancy and other fields. The pull on traditional transportation and municipal infrastructure projects is still prominent, and the implementation of orders is expected to continue to accelerate.
We suggest paying attention to the investment opportunities in the construction sector from the following three directions: (1) the prosperity of the infrastructure municipal chain and the improvement of valuation under the continuous force of steady growth: we are optimistic about the opportunities for the continuous repair of the valuation of leading infrastructure enterprises with historically low valuation and stable performance. From the perspective of historical recovery, central infrastructure enterprises enjoy continuous excess returns from the stage of broad monetary force to economic stabilization, and pay attention to China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) Jsti Group(300284) China State Construction Engineering Corporation Limited(601668) . (2) There are bright spots in the demand structure and investment opportunities under the incremental development of new businesses: with the promotion of policies such as double carbon strategy and green and energy-saving buildings, the prosperity of fabricated buildings, energy conservation and carbon reduction and infrastructure segments related to new energy is high, and enterprises with relevant transformation layout are expected to benefit. Last week, the 14th five year plan for building energy efficiency and green building development was issued, which proposed to promote building photovoltaic, prefabricated construction and decoration. It is suggested to pay attention to Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Shenzhen Capol International&Associatesco.Ltd(002949) , Zhejiang Yasha Decoration Co.Ltd(002375) , China Railway Prefabricated Construction Co.Ltd(300374) ; Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) , etc. of new energy business transformation and incremental development; Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Center International Group Co.Ltd(603098) , Zhejiang Southeast Space Frame Co.Ltd(002135) and others benefiting from the large volume of building photovoltaic market, and Jiangxi Geto New Materials Corporation Limited(300986) and other leasing service providers of green building materials (aluminum formwork). (3) Direction of state-owned enterprise reform: 2022 is the end of the three-year action of state-owned enterprise reform. It is expected that while the reform of state-owned enterprises is advancing steadily, the previous reform dividends in corporate governance structure, strengthening incentives, mixed reform, improving efficiency and stimulating vitality are expected to enter the release period. It is suggested to pay attention to the directions of performance improvement with cost reduction and efficiency increase, new business transformation layout and asset reorganization, and Sichuan Road & Bridge Co.Ltd(600039) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Shandong Hi-Speed Road&Bridge Co.Ltd(000498) Metallurgical Corporation Of China Ltd(601618) etc.
Risk tips: the epidemic situation exceeded expectations, the real estate credit risk was out of control, the policy concentration exceeded expectations, and the progress of state-owned enterprise reform was lower than expected.
