This week (May 16, 2022 – May 20, 2022, the same below): the architectural decoration sector (SW) rose or fell by 0.99% this week. In the same period, the CSI 300 and wandequan a index rose or fell by 2.23% and 2.63% respectively, and the excess return was – 1.24% and – 1.64% respectively.
Comments on important industrial policies, event changes and data tracking: (1) on the morning of May 16, the National Bureau of statistics released the economic data of April. The economic data in April showed that the downward pressure on the economy increased, while the effectiveness of the early steady growth policy was controlled by the epidemic control, and the short-term infrastructure force was also difficult to hedge the impact of the real estate downturn. The economic stabilization and recovery need to be continuously strengthened by the steady growth policy, and the infrastructure chain will be an important focus of the policy and the highlight of subsequent demand. (2) The Ministry of Communications issued the work plan for the implementation of major transportation projects in the 14th five year plan. The Ministry of communications proposed 11 major transportation engineering project packages and selected a number of projects with large investment scale, great social impact and great technical difficulty. As the first batch of key projects to accelerate the construction of a transportation power in the 14th five year plan, it accelerated the preliminary work, reflected the requirements of moderately developing transportation infrastructure investment in advance, and will effectively drive the implementation of the transportation development plan in the 14th five year plan, It is beneficial to the acceleration of investment in transportation and the demand for relevant basic materials. (3) The national development and Reform Commission held a press conference in May to answer questions on how to promote the construction of the county. The national development and Reform Commission proposed that the key task is to pay close attention to the construction of industries, municipal facilities, public services and environmental infrastructure, so as to promote the connection and complementarity of county and rural functions. We should promote the improvement of the quality and efficiency of the county’s industrial supporting facilities, the upgrading and upgrading of the county’s municipal public facilities, the upgrading and expansion of the county’s public service facilities, and the upgrading and capacity expansion of the county’s environmental infrastructure. The implementation of relevant policies and measures will contribute to the high-quality promotion of urbanization with the county as an important carrier and make important progress. (4) LPR over 5 years was down regulated. The reduction of LPR over a period of more than 5 years is not only beneficial to reducing the purchase cost of residents on the demand side, boosting market confidence and promoting the recovery of the demand side, but also helps to reduce the medium and long-term financing cost and operating cost of real estate enterprises on the supply side, and can effectively improve the cash flow pressure of real estate enterprises. At the same time, it also reflects the further strengthening of policy relaxation. With the accumulation of policy relaxation and the improvement of restrictive factors such as the epidemic situation, the recovery of the real estate chain can be expected, and the industry fundamentals of the investment chain are closer and closer to the bottom.
Zhou viewpoint
This week, the LPR of five-year period and above was lowered, and the relaxation of local real estate continued to increase. With the gradual effective control of the epidemic and the strengthening of superposition relaxation policies, the recovery of the real estate construction chain can be expected. The economic data in April also showed that the downward pressure on the economy had increased, and the effectiveness of the early steady growth policy was controlled by the epidemic control. It was difficult to hedge the impact of the real estate downturn in the short-term infrastructure development. The economic stabilization and recovery need to be further strengthened by the steady growth policy. The infrastructure chain will be an important focus of the policy and the highlight of subsequent demand. With the subsequent acceleration of local bond issuance, the fiscal policy is expected to continue to work, the incremental policy of steady growth is expected to be launched one after another, and the infrastructure chain is still the core beneficiary direction.
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.
