Matters: on January 10, Premier Li Keqiang chaired an executive meeting of the State Council, which pointed out that it is necessary to accelerate the implementation of 102 major projects and key projects of special planning in the outline of the 14th five year plan. Focusing on the construction of infrastructure such as food and energy security, advanced manufacturing, transportation and communication, affordable housing and other fields, we will ensure financing, land use and energy use. Simplify the procedures for the projects listed in the plan and qualified, especially the major water conservancy projects that have been demonstrated for many years, and adopt the way of work relief to enable some migrant workers who are temporarily unemployed to have work and income.
The meeting highlighted the urgency of stabilizing growth, and the acceleration of infrastructure is expected to heat up again. In this meeting, the expressions of “accelerating implementation”, “doing a good job in guarantee”, “simplifying procedures” and “stepping up implementation” all show the urgent willingness of the government to promote the accelerated landing of investment, and the “taking the way of work relief” shows that investment also plays an important role in stabilizing employment. We believe that in the first half of this year, the downward pressure on the economy is great, and the infrastructure acceleration has the necessity and certain ability: 1) in terms of necessity, the real estate investment or “toughness is difficult”, and the export growth may be weak under the high base, so the infrastructure, as an important tool for counter cyclical regulation, needs to be strengthened; 2) In terms of capacity (funds and projects), since August last year, China has intensively issued more than 1.3 trillion special bonds. This year, the amount of 1.46 trillion special bonds approved in advance has also been issued. It is expected to accelerate the issuance in January to provide a source of funds for infrastructure improvement in the first half of this year. Meanwhile, the approval of fixed asset projects by the national development and Reform Commission has been significantly accelerated since November last year, which is expected to support the improvement of infrastructure in the first half of the year.
New and old infrastructure such as energy, communications, transportation and water conservancy have made joint efforts to maintain steady growth, and advanced manufacturing has been overweight to help repair manufacturing investment. New infrastructure such as new power system and 5g communication to ensure energy security has high investment efficiency and fast demand growth, which is expected to be an important support direction for steady growth. The volume of old infrastructure such as transportation and large-scale water conservancy projects is large, which is the basic plate for stable investment. It is expected to make joint efforts with new infrastructure for steady growth. Policies to support investment in advanced manufacturing and accelerate industrial transformation and upgrading are expected to promote the continued repair of manufacturing investment this year. Affordable housing is one of the key points for steady growth and is expected to accelerate the development of green buildings and prefabricated buildings. In December last year, the central economic work conference changed from “attaching great importance” to “promoting” the construction of affordable housing in 2020. This national regular meeting again highlighted that the construction progress of affordable housing may be significantly accelerated in 2022. We believe that accelerating the construction of affordable housing can not only improve people’s livelihood, but also hedge the contraction of investment in private real estate enterprises and stabilize real estate investment. It is expected to become one of the important starting points for steady growth this year and is expected to be given priority to financial resources. As a policy carrier to guide the transformation of the industry, it is expected that the government will put forward higher requirements for the assembly rate and green construction standards of affordable housing, and promote the whole construction industry chain to accelerate the transformation of industrialization, greening and informatization.
Investment suggestions: the steady growth is expected to rise again, which is expected to drive the improvement of the valuation of the construction sector. The key points are: 1) new power system: focus on recommending and paying attention to the leading Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) of green power construction and operation of central enterprises, the leading Suwen Electric Energy Technology Co.Ltd(300982) of private distribution network EPCO, and the expert Acrel Co.Ltd(300286) of enterprise energy efficiency control; 2) Affordable housing construction: key recommendations Shenzhen Capol International&Associatesco.Ltd(002949) , Shanghai Construction Group Co.Ltd(600170) , China State Construction Engineering Corporation Limited(601668) ; 3) Steel structure Faucet: key recommendations Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Anhui Honglu Steel Construction(Group) Co.Ltd(002541) ; 4) Undervalued blue chips: it is recommended to focus on the construction of central enterprises China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) , and the leading infrastructure design enterprises China Design Group Co.Ltd(603018) , Jsti Group(300284) . In addition, continue to focus on Dongzhu Ecological Environment Protection Co.Ltd(603359) actively distributing forestry carbon sink and Runa Smart Equipment Co.Ltd(301129) experts in heating and energy saving system.
Risk tips: policy promotion is less than expected, epidemic impact is more than expected, accounts receivable risk, overseas operation risk, etc.
