Key investment points
This week (April 18, 2022 – April 22, 2022, the same below): the building decoration sector (SW) rose or fell by – 6.36% this week. In the same period, the CSI 300 and wandequan a index rose or fell by – 4.19% and – 4.76% respectively, and the excess return was – 2.17% and – 1.6% respectively.
Comments on important industrial policies, event changes and data tracking: (1) on the morning of April 18, the National Bureau of statistics released the economic data of March. Steady growth continues to be verified in infrastructure investment, with energy investment as the highlight. Q1 national infrastructure investment in a broad sense and infrastructure investment in a narrow sense (excluding electricity) were + 10.5% / 8.5% year-on-year respectively, 10.3pct/8.1pct faster than that in 2021, of which the investment in the production and supply of electricity, heat, gas and water was + 19.3% year-on-year, 18.2pct faster than that in 2021, reflecting that the aging and upgrading of energy source infrastructure and urban gas pipelines are more flexible as the key direction of this round of infrastructure. However, the current rebound in infrastructure construction is difficult to offset the impact of the real estate downturn and the epidemic situation. In the short term, it is pending the mitigation of epidemic control and the continued development of infrastructure construction. The growth rate of Q1 fixed asset investment fell by 2.9pct compared with that from January to February, indicating that the drag of real estate investment and manufacturing investment is far greater than the support of infrastructure. In terms of the data from the construction site, the growth rate of cement shipments has still increased by 20% year-on-year, especially since the last ten days of the year, especially the impact of the high-frequency construction network. In addition, under the pressure of centralized cashing in May and June, the speed of short-term real estate construction is difficult to accelerate significantly, and the continued development of infrastructure is also needed. (2) On April 18, the people’s Bank of China and the State Administration of foreign exchange issued the notice on doing a good job in epidemic prevention and control and financial services for economic and social development. First, it is clearly mentioned that the reasonable financing needs of financing platform companies shall be guaranteed according to the market-oriented principle, and loans shall not be blindly withdrawn, pressed or stopped, so as to ensure the smooth implementation of projects under construction, reflect the financing policy or marginal deregulation of urban investment platform, which is conducive to the transmission of broad money and finance to credit. The second is to increase the support for high-quality real estate projects to meet the reasonable financing needs of construction enterprises.
Zhou viewpoint
The central bank issued 23 anti epidemic financial measures to provide advanced support to real estate, urban investment and construction enterprises, clearly proposed to moderately increase the support of liquidity loans, and clearly proposed to meet the reasonable financing needs of construction enterprises for the first time to maintain the continuous and stable financing of construction enterprises. In March, infrastructure continued to rise, but the current rebound in infrastructure is difficult to offset the impact of the decline in real estate and the epidemic. It is expected that the development of infrastructure and the relaxation of real estate will continue. The fiscal revenue and expenditure in the early stage and the issuance of special bonds reflect the continuous development of fiscal policies. The construction PMI, provincial investment plans and enterprise orders reflect that the pace of project implementation has been significantly accelerated, and the prosperity of the infrastructure chain will continue to rise.
We suggest paying attention to the investment opportunities in the construction sector from the following three directions: (1) the prosperity of the infrastructure municipal chain and the improvement of valuation under the continuous force of steady growth: we are optimistic about the opportunities for the continuous repair of the valuation of leading infrastructure enterprises with historically low valuation and stable performance. From the perspective of historical recovery, central infrastructure enterprises enjoy continuous excess returns from the stage of broad monetary force to economic stabilization, and pay attention to China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) Jsti Group(300284) , China State Construction Engineering Corporation Limited(601668) (China Shipping asset valuation repair), etc. (2) There are bright spots in the demand structure and investment opportunities under the incremental development of new businesses: with the promotion of policies such as double carbon strategy and green and energy-saving buildings, the prosperity of fabricated buildings, energy conservation and carbon reduction and infrastructure segments related to new energy is high, and enterprises with relevant transformation layout are expected to benefit. Last week, the 14th five year plan for building energy efficiency and green building development was issued, which proposed to promote building photovoltaic, prefabricated construction and decoration. It is suggested to pay attention to Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Shenzhen Capol International&Associatesco.Ltd(002949) , Zhejiang Yasha Decoration Co.Ltd(002375) , China Railway Prefabricated Construction Co.Ltd(300374) ; Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) , etc. of new energy business transformation and incremental development; Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Center International Group Co.Ltd(603098) , Zhejiang Southeast Space Frame Co.Ltd(002135) and others benefiting from the large volume of building photovoltaic market, and Jiangxi Geto New Materials Corporation Limited(300986) and other leasing service providers of green building materials (aluminum formwork). (3) Direction of state-owned enterprise reform: 2022 is the end of the three-year action of state-owned enterprise reform. It is expected that while the reform of state-owned enterprises is advancing steadily, the previous reform dividends in corporate governance structure, strengthening incentives, mixed reform, improving efficiency and stimulating vitality are expected to enter the release period. It is suggested to pay attention to the directions of performance improvement with cost reduction and efficiency increase, new business transformation layout and asset reorganization, and Sichuan Road & Bridge Co.Ltd(600039) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , Shandong Hi-Speed Road&Bridge Co.Ltd(000498) Metallurgical Corporation Of China Ltd(601618) etc.
Risk tips: the epidemic situation exceeded expectations, the real estate credit risk was out of control, the policy concentration exceeded expectations, and the progress of state-owned enterprise reform was lower than expected.
