\u3000\u3000 China State Construction Engineering Corporation Limited(601668) (601668)
Event: China State Construction Engineering Corporation Limited(601668) announced that the newly signed contract amount from January to December 2021 was 35295 billion yuan, an increase of 10.3% at the same time. Among them, the newly signed contract amount of construction business was 3107.4 billion yuan, an increase of 12.1% over the same period; The contract sales of real estate business was 422.1 billion yuan, an increase of – 1.5% at the same time.
Comments:
The company’s new construction business increased by 3107.4 billion yuan year-on-year, with a significant year-on-year increase of new construction business of + 1.21%; The newly signed contract amount in December alone was 466.1 billion yuan, a year-on-year increase of + 42.7%. By business, the cumulative newly signed contract amount of infrastructure business in 21 years was 843.9 billion yuan, a year-on-year increase of + 24.1%; The newly signed contract amount in December alone was + 9.3% year-on-year. The cumulative newly signed contract amount of housing construction business in 21 years was RMB 2250.6 billion, a year-on-year increase of + 8.3%; The newly signed contract amount in December alone was + 78.5% year-on-year. In the past 21 years, the new construction area of the company’s houses was + 12.4% year-on-year; The completed area of the house was + 26.7% year-on-year.
Since 21h2, investment in real estate and infrastructure has been relatively weak; In December, the margin of real estate policy improved, and the company’s new real estate construction contracts rebounded sharply in the same month, verifying the company’s competitive advantage as a leader in real estate construction; At the same time, the newly started and completed area of the company’s housing construction also maintained a good growth.
The real estate sales were stable, and the land reserve increased significantly in December. It is optimistic about the development of CNOOC real estate in 22 years: in 2021, the company’s real estate business accumulated contract sales of 422.1 billion yuan, a year-on-year increase of – 1.5%; In December alone, it was – 0.5% year-on-year and + 33.7pcts month on month. In the context of the overall downturn in sales in the real estate industry, the company’s contract sales were roughly flat year-on-year, which verified the competitiveness of its real estate business (especially CNOOC real estate). In the past 21 years, the company has accumulated 18.42 million square meters of newly purchased land reserves, a year-on-year increase of – 9.6%; In December alone, the net increase was 3.29 million square meters, with a month on month increase of + 160% and a year-on-year increase of + 98%.
The real estate business of the company adheres to the steady business strategy for a long time; Its subsidiary, CNOOC real estate, has excellent financial indicators and has the financing advantages of central enterprises. In the real estate downward cycle of 21h2, the impact on the company is small; With the marginal improvement of real estate financing and the optimization of land auction pattern (some private enterprises withdraw passively), the company’s competitive advantage may be further strengthened. It is judged that the follow-up companies realize counter trend expansion through project asset M & A or purchase of high-quality land resources by virtue of their healthy financial statements, smooth financing channels and relatively low financing costs. The rapid growth of newly purchased land reserves in December 21 may verify the above judgment.
Profit forecast, valuation and rating: we are optimistic about the company’s competitiveness in housing construction, infrastructure and other fields. The company’s newly signed orders maintain a rapid growth rate, showing that the leader can still achieve stable growth through the improvement of market share under the background of weak overall market demand. In the past 22 years, the company may benefit from the steady growth policy and the improvement of the concentration of leaders in the real estate industry. Maintain the company’s EPS forecast of 1.20 yuan, 1.29 yuan and 1.41 yuan from 2021 to 2023 respectively. The current price corresponds to the company’s 21-year dynamic P / E ratio of 4.4x, maintaining the “buy” rating.
Risk tip: there is a risk of declining demand for housing construction, a risk of declining growth rate of infrastructure investment, and a risk of too high land acquisition price in real estate business.
