In March, the growth of fixed investment slowed down, infrastructure accelerated, manufacturing slowed down, and the growth of real estate turned negative. From January to march in 2022, fixed investment increased by 9.3% year-on-year and 6.7% in a single month in March, 5.5 PCT slower than that from January to February. Among them, infrastructure investment (full caliber) increased by 11.8% in March, accelerating by 3.2 PCT compared with January February; Manufacturing investment increased by 11.9%, slowing down by 9 PCT; The monthly growth rate of real estate investment changed from positive to negative, with a year-on-year decline of 2.4%.
Infrastructure investment continues to improve, and policies are expected to be strengthened under the impact of the epidemic. From January to March, infrastructure investment (excluding power, etc.) increased by 8.5% year-on-year, 0.4 PCT faster than that from January to February; Infrastructure investment (full caliber) increased by 10.5% year-on-year, accelerating by 1.9 PCT compared with January February. Infrastructure investment continues to improve. It is expected that the new and old infrastructure will gradually develop due to the accelerated issuance and use of special bonds in the early stage. In terms of breakdown, the supply of electric heating gas and water in a single month in March increased by 24.4% year-on-year (the previous value was 11.7%), which is expected to be mainly due to the accelerated investment in new power systems and other fields; Transportation, warehousing and postal services increased by 8.9% year-on-year (the previous value was 10.5%); The management of Water Conservancy Environment and public facilities increased by 9.4% year-on-year (the previous value was 6%), which is expected to be mainly due to the acceleration of investment in large-scale water conservancy projects by the central government. Infrastructure investment made a good start in the first quarter, but the epidemic rebounded significantly at the end of March, impacting the supply chain and further increasing the impact on manufacturing and foreign trade. Under the new situation, the steady growth policy needs to be “vigorously”, and the follow-up funds and policies are expected to increase the support for infrastructure.
In March, the growth rate of real estate investment turned negative, the fundamentals accelerated downward, and the policy is expected to continue to relax. From January to March, real estate investment increased by 0.7% year-on-year, three PCT slower than that from January to February, and decreased by 2.4% year-on-year in that month. According to the monthly data in March, the growth rate of sales area was – 17.7% (former value – 9.6%), the newly started area was – 22.2% (former value – 12.2%), the completed area was – 15.5% (former value – 9.8%) and the amount of funds in place was – 23% (former value – 17.7%) year-on-year. The decline of most important indicators has significantly expanded, and the fundamentals of the real estate industry have accelerated downward, which will gradually reflect the negative impact on the economy. It is expected that the real estate field will be an important driving force for subsequent steady growth. At present, many places have relaxed the regulation and control policies. It is not ruled out that more key cities will join in the follow-up, and the policy relaxation is expected to continue to increase.
Investment in manufacturing slowed significantly, and the momentum of repair was constrained by the epidemic. Manufacturing investment increased by 15.6% year-on-year from January to March and 11.9% in a single month in March, a significant slowdown of 9 PCT compared with January to February. It is expected to be mainly affected by the rebound of the epidemic. At present, as a logistics and manufacturing center, Shanghai continues to be sealed and controlled, which has a significant impact on the supply chain; The epidemic prevention and control measures in many places have affected the profit expectation of enterprises. It is expected that the momentum of subsequent manufacturing investment and repair will be restricted to some extent.
Investment suggestion: the inflow of social finance into infrastructure in Q1 is estimated to increase by 24% at the same time. Infrastructure credit is on the way, and the impact of the epidemic has begun to appear. Under the new situation, the steady growth policy needs to be “vigorously”, which is expected to drive the continuous expansion of the valuation of the construction sector. Focused attention and recommendations: 1) central enterprises China State Construction Engineering Corporation Limited(601668) the; 2) High growth local state-owned enterprise Shandong Hi-Speed Road&Bridge Co.Ltd(000498) (pe5.2x); 3) Capital construction design leader China Design Group Co.Ltd(603018) (pe7.4x), Jsti Group(300284) (pe14x); 4) The steel structure leader benefited from the overweight of infrastructure construction and the rapid expansion of photovoltaic building demand, and is optimistic about Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) (pe11x) and Anhui Honglu Steel Construction(Group) Co.Ltd(002541) (pe16x).
Risk tip: there is a risk that the steady growth policy does not meet expectations, the risk of impairment of accounts receivable, the risk of repeated epidemic, and the risk of sharp rise in the price of raw materials.
