Special topic of this week: sorting out investment opportunities and targets related to underground pipe network
1) what areas of pipeline network investment opportunities are expected to accelerate?
Recently, the transformation of underground pipe network has been mentioned many times at key meetings, and the demand for urban pipe network transformation at the policy level has increased significantly. During the 14th Five Year Plan period, we believe that pipeline investment in urban pipeline renewal, sewage treatment, comprehensive pipe gallery, key projects and other fields is expected to accelerate;
2) sort out relevant targets of underground pipe network, and it is suggested to focus on pipeline investment opportunities
From the perspective of industrial chain, we believe that the investment opportunities of underground pipe network mainly focus on the four aspects of "pipeline manufacturing", "pipeline construction", "pipeline security" and "exploration and design":
1) pipeline manufacturing: from the above analysis, the pipeline network investment is large and the unit investment is high, so pipeline manufacturing is an area with high certainty. Taking urban drainage pipelines as an example, pipeline products involving transmission and drainage mainly include concrete pipelines, metal pipelines and plastic pipelines. Different materials and properties determine the application scope of various pipeline products. With the accelerated construction of underground pipe gallery, we believe that relevant pipeline manufacturing companies are expected to benefit, The higher the proportion of municipal business, the more obvious the benefit of the company; The related targets include Fujian Superpipe Co.Ltd(300198) , Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) , Xinxing Ductile Iron Pipes Co.Ltd(000778) , Shandong Donghong Pipe Industry Co.Ltd(603856) , Guangdong Sanhe Pile Co.Ltd(003037) , Ningxia Qinglong Pipes Industry Group Co.Ltd(002457) , Beijing Hanjian Heshan Pipeline Co.Ltd(603616) , China Liansu, Zhejiang Weixing New Building Materials Co.Ltd(002372) , Yonggao Co.Ltd(002641) , etc;
2) pipeline construction: the construction of underground pipe network is related to people's livelihood and urban safety, so the subsequent pipeline construction needs the participation of more professional construction and construction companies, including Metallurgical Corporation Of China Ltd(601618) , China State Construction Engineering Corporation Limited(601668) , Hongrun Construction Group Co.Ltd(002062) and Shanghai Tunnel Engineering Co.Ltd(600820) ;
3) pipeline security & Survey and Design: due to the needs of underground pipe network, supporting fire engineering, monitoring and alarm system, drainage system, identification system, control center (operation, monitoring and control), etc. shall be built, including Zhengyuan Geomatics Group Co.Ltd(688509) , Beijing Egova Co.Ltd(300075) , Jsti Group(300284) , China Design Group Co.Ltd(603018) and so on.
Market Review
Last week, the construction (CITIC) index rose 3.76%, the CSI 300 index fell 1.22%, and all the tertiary sub sectors rose. The infrastructure and housing construction sectors dominated by blue chips of central enterprises led the gains, recording positive gains of 5.33% and 4.41% respectively. Among the stocks, Huitong group (+ 46.94%), Beijing Zeho Waterfront Ecological Environment Treatment Co.Ltd(605069) (+ 46.41%), Shanghai Geoharbour Construction Group Co.Ltd(605598) (+ 29.06%), Shenzhen Grandland Group Co.Ltd(002482) (+ 24.69%), Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) (+ 21.60%) led the increase. At present, the hot spots in the market are mainly concentrated in the "construction + new energy" and "carbon neutralization" industrial chain. The recent valuation repair of infrastructure sector is obvious. We believe that the downward pressure on the economy has increased, It is suggested to actively pay attention to the guidelines of the follow-up central meeting on counter cyclical regulation.
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 value variety valuation restoration, local state-owned enterprise leaders are expected to enjoy the high prosperity of regional infrastructure. The profit elasticity brought by the improvement of operating efficiency has initially appeared. There are opportunities for both steady growth and report quality improvement in the medium and long term. 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, they also have strong elasticity of valuation 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.
