Key investment points
Investment advice
Plate tracking:
1) in April, the fixed investment in infrastructure increased steadily and the water conservancy increased by 16.4%. The logic of giving priority to steady growth continued to confirm the investment in infrastructure: the fixed investment in infrastructure in April was + 3.0% year-on-year, of which the fixed investment in water conservancy increased by + 16.4% year-on-year. From January to April, the national water conservancy projects have implemented 72 billion yuan of special bonds of local governments, with a year-on-year increase of 115%. The national water conservancy construction investment has reached 19.8 billion yuan, with a year-on-year increase of 45.5%. Policy: on May 11, the executive meeting of the State Council pointed out that we should revitalize stock assets and expand effective investment through REITs and other means. Projects: from January to April, 9 national major water conservancy projects were started; The completed investment of large projects was + 10.9% year-on-year, driving the total investment growth of 5.5pct; The planned total investment of new projects was + 28.0% year-on-year.
2) orderly resumption of work and production in Shanghai / relaxation of real estate regulation, marginal improvement of steel structure / housing construction chain demand, and orderly resumption of work: on May 16, all 16 districts in Shanghai have achieved social clearance, and Shanghai Municipal Commission of housing and urban rural development issued the first batch of "white list" of resumption of work involving 24 projects, of which 16 projects have been resumed and 8 projects are in preparation for resumption of work. On May 16, the national highway truck traffic volume increased by 16.4% on a day-on-day basis. Policy relaxation: on May 15, the central bank and the China Banking and Insurance Regulatory Commission lowered the lower limit of the first mortgage interest rate, accelerated the introduction of local real estate rescue policies, and the real estate sales data is expected to be adjusted.
Investment suggestions:
1) select the most underestimated value China Railway Construction Corporation Limited(601186) , recommend new energy infrastructure Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) , pay attention to China Railway Group Limited(601390)
Traditional construction central enterprises: focus on sector opportunities, and select China Railway Construction Corporation Limited(601186) (4.1 times) with the lowest valuation from the perspective of valuation elasticity. The newly signed contract amount of water conservancy and power projects of 22q1 company was 11.74 billion yuan, a year-on-year increase of 210.26%.
It is recommended that new energy infrastructure including water conservancy construction Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) water conservancy and hydropower construction has a market share of more than 50% China Energy Engineering Corporation Limited(601868) 428: Hubei Qichun pumped storage power station was signed, with an installed capacity of 1.2gw. After being put into operation, it is expected to contribute 100 million yuan of local tax every year. We judge that the performance of new energy infrastructure is expected to achieve a compound growth of more than 15%, which is only about 10 times PE at present. We focus on it.
Pay attention to traditional infrastructure central enterprises China Railway Group Limited(601390) China Railway Group Limited(601390) acquired 33.54% equity of water diversion in Central Yunnan, a major water conservancy project, on May 13, which is expected to accelerate the company's cultivation and development of water conservancy and hydropower business and promote industrial transformation.
2) focus on steel structure sector with marginal improvement of Fundamentals
The resumption of work and production in Shanghai has been promoted in an orderly manner, the supply chain has been gradually repaired, and the demand for steel structure may be met. It is suggested to pay attention to the steel structure manufacturing / engineering leader Anhui Honglu Steel Construction(Group) Co.Ltd(002541) / Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , whose fundamentals are expected to usher in an inflection point, and choose the bottom layout.
Downstream: investment is strong and resilient. In April, the fixed investment in infrastructure construction increased by 3.0% year-on-year
Capital side: in April, the M2 balance was 250.0 trillion yuan, and the new social finance was 0.91 trillion yuan. The issuance rhythm of special bonds in April was much ahead of the same period last year, and the cumulative year-on-year decrease of urban investment bonds was 10.4%.
Investment side: the cumulative fixed asset investment is + 6.8% year-on-year, and the cumulative infrastructure investment is + 6.5% year-on-year.
(1) real estate: in April, the cumulative investment in real estate development was - 2.7% year-on-year, and the area of land acquisition / sales continued to decline;
(2) capital construction: in April, the capital construction investment (excluding power) accumulated + 6.5% year-on-year;
(3) industry: in April, the cumulative fixed asset investment in manufacturing and mining industry was + 12.2% and + 18.8% year-on-year.
Demand side: PMI of construction industry dropped to 52.7% in April.
Infrastructure: major projects: as of May 17, 25 provinces have released the investment amount of major projects in 2022, with a total investment of nearly 13.4 trillion, and the total investment of comparable provinces increased by 23.8% year-on-year.
Upstream: in May, cement and glass prices were - 3.9% and - 0.1% month on month, while steel prices were down. Building materials: on May 13, the comprehensive index of building materials was 167.89 points, a month on month increase of + 3.3%, a year-on-year increase of + 13.1%; The price indexes of cement and glass were - 3.9% and - 0.1% month on month, respectively. Retail sales of building materials: from January to April, the cumulative retail sales of construction and decoration materials reached 54.1 billion yuan, a year-on-year decrease of 0.7%. Steel: on May 16, the unit prices of rebar, medium sector, high-speed wire and round steel decreased by 3.7%, 2.0%, 2.6% and 2.6% month on month respectively.
Construction equipment: the sales volume of excavators in April decreased by 61.0% year-on-year, and the operating hours in April decreased by 16.6% year-on-year. Aluminum alloy temsector: in April, the PMI of aluminum alloy temsector development index was 43.5%, down 13.8pct month on month, of which the production index decreased by 9.8pct to 48.2% month on month, and the new order index decreased by 11.6 to 45.5% month on month.
Assembled sector tracking
Policy: on April 18, 2022, the 14th five year plan for urban housing development in Chongqing (20212025) issued by Chongqing Municipal Commission of housing and urban rural development made it clear that by 2025, the proportion of new urban civil buildings implementing green building standards will reach 100%; Newly started prefabricated buildings account for more than 30% of new buildings; The proportion of fully decorated houses reached 30%.
Orders: 22q1 Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Zhejiang Southeast Space Frame Co.Ltd(002135) , Anhui Fuhuang Steel Structure Co.Ltd(002743) , Hangxiao Steel Structure Co.Ltd(600477) the cumulative contract amount of newly signed orders were 6.013 billion yuan, 4.46 billion yuan, 3.12 billion yuan, 1.4 billion yuan and 4.625 billion yuan respectively, with a year-on-year increase of + 14.7%, + 34.0%, + 64.6%, - 52% and + 85.1%.
Infrastructure sector tracking
Orders from central construction enterprises: from January to April 2022, China State Construction Engineering Corporation Limited(601668) / China National Chemical Engineering Co.Ltd(601117) / Metallurgical Corporation Of China Ltd(601618) newly signed contracts amounted to 10451 / 1241 / 4057 billion yuan respectively, with a year-on-year increase of 16.6% / 76.5% / 12.2% respectively; 22q1, China Railway Construction Corporation Limited(601186) / China Railway Group Limited(601390) / Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) / China Energy Engineering Corporation Limited(601868) / China Communications Construction Company Limited(601800) newly signed contracts amounted to 4659 / 6057 / 2476 / 2441 / 4307 billion yuan respectively, with a year-on-year increase of 1.5% / 84.0% / 7.0% / 0.1% / 4.9% respectively. The newly signed 22q1 of the above eight central construction enterprises totaled 3.25 trillion yuan, an increase of 18% over the total newly signed 21q1 of 2.77 trillion yuan. PPP warehousing projects: the amount of new warehousing projects in March was 118152 billion yuan, a year-on-year increase of - 16.3%.
Risk tips
Covid-19 epidemic rebounded in China; The growth rate of infrastructure investment is lower than expected; The growth rate of real estate investment is lower than expected; The penetration rate of prefabricated buildings increased less than expected.
