In December, the growth rate of fixed investment became positive, infrastructure and manufacturing were repaired, and real estate accelerated downward. From January to December 2021, the fixed investment increased by 4.9% year-on-year, 0.3 PCT slower than that from January to November, and 3.9% higher than the compound growth rate of 19 years, which is in line with the expectation as a whole. In December, it increased by 2.1% year-on-year, ending the decline for three consecutive months. Among them, the infrastructure has been significantly improved, the manufacturing industry has continued to repair, driving the overall growth rate of fixed investment back to positive, and the real estate investment has accelerated downward.
Infrastructure investment has improved significantly, and the steady growth policy is expected to continue to bear fruit. In 2021, infrastructure investment (excluding power, etc.) increased by 0.4% year-on-year, 0.1 PCT slower than that from January to November, 0.6 PCT lower in a single month, and the decline narrowed by 3 PCT; Infrastructure investment (full caliber) increased by 0.2% year-on-year, accelerated by 0.4 PCT compared with January November, increased by 3.7% year-on-year in a single month, significantly accelerated by 11 PCT compared with November, ending seven consecutive months of negative growth. In December, infrastructure investment improved significantly. It is expected that the new and old infrastructure will start to work gradually due to the accelerated issuance and use of early-stage special bonds. In terms of breakdown, in December, the supply of electric heating gas and water increased by 8.1% year-on-year, accelerating by 9.5 PCT, which is expected to be mainly due to the accelerated investment in new power systems and other fields; Transportation, warehousing and postal services increased by 7.1% year-on-year, with a significant acceleration of 16.6 PCTs. It is expected that the central government will accelerate the implementation of large-scale projects such as railways and expressways; The management of Water Conservancy Environment and public facilities decreased by 0.3% year-on-year, narrowed by 7.7 PCT, and improved significantly. However, municipal and other investments are still in the negative growth range subject to the control of implicit debt. On the whole, the current downward pressure on the economy is still great, and the driving force for stable policy growth is sufficient. Since the end of last year, a series of important meetings have continued to demonstrate China’s determination to stabilize growth. The necessity and policy attitude for stable growth are relatively clear. It is expected that the follow-up policies will continue to work and promote the continuous improvement of infrastructure investment in the first half of this year.
Real estate investment accelerated downward, and affordable housing is expected to be one of the stable investment directions. In 2021, real estate investment increased by 4.4% year-on-year, slowed down by 1.6 PCT compared with January November, decreased by 13.9% year-on-year in December, and expanded by 9.6 PCT compared with November, showing an accelerated downward trend. In a single month in December, the year-on-year growth rate of sales area was – 15.6% (former value – 14.0%), the year-on-year growth rate of new construction area was – 31.2% (former value – 21.0%), the year-on-year growth rate of land acquisition area was – 33.2% (former value – 12.5%), and the year-on-year growth rate of funds in place was – 19.3% (former value – 7.0%).
Most important indicators have significantly accelerated the downward trend, and the fundamentals of the real estate industry still need more policy adjustment and time to wait. At a news conference last week, the Ministry of housing and urban rural development said that it would increase policy support for finance, land and public services and expand the supply of affordable rental housing. In the steady growth measures, the national standing committee also focused on accelerating the construction of urban affordable housing. In the future, affordable housing is expected to undertake the triple tasks of common prosperity, non speculation in housing and stable economic growth, The follow-up promotion is expected to accelerate.
Manufacturing investment continued to be repaired, and investment in high technology and technological transformation grew rapidly. In 2021, the investment in manufacturing industry increased by 13.5% year-on-year, with a compound growth rate of 5.4% in two years. In December, it increased by 11.8% year-on-year, accelerating 1.8 PCT compared with November, continuing the repair trend. Among them, the investment in high-tech manufacturing industry increased by 22.2% in 2021, faster than the overall manufacturing industry. From January to November, the investment in technological transformation of manufacturing industry increased by 15.3% year-on-year, 1.6 PCT higher than the overall growth rate, and has been higher than the overall growth rate since 2021; Technological transformation investment accounted for 41.0% of total manufacturing investment, 0.3 PCT higher than that from January to October.
Investment suggestions: focus on three directions with stable growth and high economic elasticity: 1) affordable housing: focus on China State Construction Engineering Corporation Limited(601668) (pe4x), Shanghai Construction Group Co.Ltd(600170) (pe7x), Shenzhen Capol International&Associatesco.Ltd(002949) (pe13x); 2) Steel structure: mainly recommended Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) (pe11x), Anhui Honglu Steel Construction(Group) Co.Ltd(002541) (pe17x); 3) New power system: focus on recommending and paying attention to Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) (pe12x), China Energy Engineering Corporation Limited(601868) (pe12x), private distribution network EPCO leader Suwen Electric Energy Technology Co.Ltd(300982) (pe23x), enterprise energy efficiency control expert Acrel Co.Ltd(300286) (pe32x). In addition, the overall valuation of infrastructure blue chip is at the lowest range in history, and the expected improvement of infrastructure is expected to promote valuation repair. It is recommended to focus on central construction enterprises China Communications Construction Company Limited(601800) (pe5.8x), China Railway Group Limited(601390) (pe4.7x), China Railway Construction Corporation Limited(601186) (pe3.8x), infrastructure design leaders China Design Group Co.Ltd(603018) (pe7x), Jsti Group(300284) (pe11x).
Risk tips: policy promotion is less than expected, epidemic impact is more than expected, accounts receivable risk, overseas operation risk, etc.
