Event:
On April 18, 2022, the National Bureau of statistics released the fixed asset investment data from January to march of 22 years. From January to March 2022, the cumulative growth rate of fixed asset investment was 9.3%, with a chain comparison of -2.9pcts; Among them, the cumulative growth rate of real estate development investment was 0.7%, with a month on month increase of -3.0pcts; The growth rate of broad infrastructure investment was 10.5%, with a month on month increase of + 1.9pcts.
Comments:
From January to March 2022, the cumulative investment in broad infrastructure construction was + 10.5% year-on-year, and + 11.8% year-on-year in March alone, with a chain comparison of + 3.2pcts; The cumulative investment in infrastructure construction in a narrow sense was + 8.5% year-on-year, and + 8.8% year-on-year in March alone, with a chain comparison of + 0.7pct.
The monthly growth rate of infrastructure in a broad / narrow sense rebounded. It is judged that the main line of “stable growth” in 22 years will run through the whole year, and the investment opportunities of central construction enterprises are recommended.
In March 22, the year-on-year growth rate of broad / narrow infrastructure in a single month was significantly higher than that in the previous month, or mainly due to the “steady growth” policy, the financial support funds were gradually transmitted to the physical workload level after they were in place. The recovery of funds was strong. The cumulative growth rate of social finance in 22q1 was 18%, of which the cumulative growth rate of entrusted loans and government bonds were 1020% and 140% respectively. At the industry level, the monthly investment growth rates of electric heating and water combustion, transportation and storage, postal services and water conservancy public facilities were 24.4%, 8.9% and 9.4% respectively, and the monthly investment in education, health and social work were + 15.2% and + 22.2% respectively. It is judged that the local government finance is making efforts.
We judge that benefiting from the recovery of capital, the growth rate of infrastructure in the first half of 22 years may maintain a high growth rate, and the subsequent public infrastructure REITs may become the main source of incremental capital for infrastructure investment. The impact of the epidemic in China has gradually emerged, and the need for follow-up “steady growth” has further increased. We judge that the “steady growth” market will continue to focus on the central construction enterprises. Recently, the main central construction enterprises have successively disclosed the annual report and the operation in the first quarter, showing strong resilience. The newly signed orders have improved to varying degrees driven by the recovery of infrastructure investment, and the valuation safety margin is strong, which is the priority choice for the “steady growth” investment direction.
From January to March 2022, the cumulative area of new construction was – 17.5% year-on-year, with an increase of – 22.2% in March alone, with a month on month increase of – 10.1pcts; The cumulative completed area was – 11.5% year-on-year, and – 15.5% year-on-year in March alone, with a month on month ratio of – 5.7pcts.
The decline in the growth rate of new construction in a single month has expanded, and the sales downturn may continue to suppress the growth rate of new construction. Land acquisition: in March, the transaction and construction surface of residential land in 100 large and medium-sized cities was – 86% year-on-year and -0.4pct month on month. Sales: the sales area in March was – 17.7% year-on-year and – 8.1pcts month on month; The recent epidemic in China may exacerbate the sales downturn in the real estate industry.
The monthly growth rate of the completed project fell back, or disturbed by the epidemic and the short-term capital of real estate enterprises, the medium-term improvement trend has not changed. In March, the growth rate of real estate development funds in a single month was – 23.0% year-on-year, with a month-on-month increase of -5.3pcts; Among them, the month on month growth rates of Chinese loans, self raised funds and personal mortgage loans were -8.7pcts, + 3.9pcts and -5.2pcts respectively. The completion is disturbed by the epidemic situation in China and the capital level of real estate enterprises. Considering the national “guaranteed housing delivery” policy and the reality that the completion cycle has not ended, it is judged that the growth rate of the completion end of 22q2 may pick up.
Investment suggestion: we judge that the growth rate of infrastructure construction may maintain a high growth rate in the first half of 22 years, and it is expected that the growth rate of new construction will remain sluggish in the medium and long term. We judge that the slowdown of completion growth is a phased disturbance, and the growth rate of 22q2 completion end may pick up. Around the three directions we are optimistic about, we recommend: 1) the direction of central construction enterprises, including China State Construction Engineering Corporation Limited(601668) , China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , etc. 2) In the field of new energy for electric power, we recommend Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China energy construction. 3) In the field of assembly and equipment leasing, Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) , Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Hongxin construction and Jiangxi Geto New Materials Corporation Limited(300986) , are recommended. Other recommendations: Sinoma International Engineering Co.Ltd(600970) , suggestions: China Building Material Test & Certification Group Co.Ltd(603060) .
Risk tip: the growth rate of government bond financing is lower than expected, resulting in the lower than expected growth rate of infrastructure, the tight capital chain of real estate developers, and the completion recovery is lower than expected. The centralized land supply affects the capital arrangement of real estate enterprises, resulting in the lower than expected growth rate of new construction and the lower than expected growth rate of real estate investment.
