Key investment points
This week (2022.4.25 – 2022.4.29, the same below): the architectural decoration sector (SW) rose or fell by 4.09% this week. In the same period, the CSI 3 and wandequan a indexes rose or fell by 0.07% and – 1.56% respectively, and the excess returns were 4.02% and 5.65% respectively.
Comments on important policies, event changes and data tracking of the industry: (1) the National Bureau of statistics released the operation of the non Manufacturing Purchasing Manager Index in April: the business activity index of the construction industry was 52.7%, 5.4 percentage points lower than that of the previous month, which is still in the expansion range. The construction industry is expected to improve by 5.5% last month, which is mainly reflected by the improvement of the business order index of the construction industry, which is still 5.5% higher than the expected level of last month. On the other hand, the business activity index of civil engineering construction industry is 61.0%, which has been in the high boom range for two consecutive months, and the new order index is 52.3%, which continues the expansion trend and is significantly better than the overall level of the construction industry, indicating that the effect of infrastructure development continues to appear, and the boom is significantly better than housing construction. With the moderate advance of major infrastructure construction, the civil engineering construction industry maintains a rapid construction progress, and the pull on the physical demand will be more significant. (2) The central finance and Economic Commission meeting studied comprehensively strengthening infrastructure construction. The meeting pointed out that China’s infrastructure does not meet the needs of national development and security. Comprehensively strengthening infrastructure construction is of great significance to ensure national security, unblock China’s big cycle, promote China’s international double cycle, expand domestic demand and promote high-quality development. Traditional infrastructure networking, network reinforcement and chain strengthening are still important, and the new infrastructure is in full swing. In addition to strengthening the infrastructure construction of industrial upgrading such as information, technology and logistics, strengthening the construction of intelligent infrastructure and developing distributed smart grid conference. At the same time, the meeting made it clear to strengthen the support and guarantee of infrastructure construction, and proposed to broaden long-term fund-raising channels and increase financial investment. The meeting also proposed to establish a coordination mechanism for major infrastructure construction and promote the standardized development and sunshine operation of the cooperation mode between the government and social capital. As an important tool for broadening social capital investment channels and infrastructure investment exit channels, infrastructure REITs market is expected to usher in accelerated development.
Zhou viewpoint
The central finance and Economic Commission meeting proposed to comprehensively strengthen infrastructure construction. New and old infrastructure is the focus of strengthening infrastructure construction. There is still a lot of room for the improvement of traditional infrastructure. From the absolute scale, it is still the most beneficial area for expanding effective investment and comprehensively strengthening infrastructure. It has a significant pulling effect on infrastructure orders of construction enterprises and basic building materials at the construction end, such as cement, water conservancy and municipal pipelines, waterproof and so on. Based on the proportion of infrastructure demand, performance cashability and valuation, it is suggested to continue to focus on the infrastructure municipal chain in construction. 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 energy-saving buildings, the prosperity of prefabricated buildings, energy conservation and carbon reduction and new energy related infrastructure segments is high, and enterprises with relevant transformation layout are expected to benefit. The 14th five year plan for building energy conservation and green building development also clearly proposes to promote building photovoltaic, prefabricated construction and decoration, etc. 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.
