[core view of this week] the overall correction of the construction sector this week is mainly due to the concern that the measures and efforts for stable growth in the market are not as strong as expected. However, we believe that the necessity and policy attitude for stable growth are relatively clear. This week, the national Standing Committee pointed out that it is necessary to accelerate the implementation of 102 major engineering projects and key projects of special planning in the outline of the 14th five year plan, requiring “accelerated implementation” Statements such as “guarantee”, “simplify procedures” and “pay close attention to implementation” all show the urgent willingness of the government to promote the accelerated landing of investment. Subsequently, with the continuous landing of policy requirements, the prosperity in relevant fields of steady growth is expected to improve, focusing on three directions with high prosperity elasticity: 1) affordable housing: at present, private real estate investment tends to shrink, and affordable housing construction undertakes common prosperity The triple tasks of non speculation in housing and housing and stable economic growth are expected to be accelerated in the follow-up. It is recommended that 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: steel structure continues to benefit from infrastructure improvement and manufacturing investment repair. At the same time, bapv / BIPV development brings incremental demand to the industry. It is recommended that Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) (pe11x), Anhui Honglu Steel Construction(Group) Co.Ltd(002541) (pe17x); 3) New power system: the new infrastructure represented by new energy infrastructure has large demand and high investment efficiency. It is expected to become the key force direction for the steady growth of follow-up infrastructure, showing a higher prospect. It focuses on recommending and paying attention to the leaders of central enterprises Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) (pe12x), China Energy Engineering Corporation Limited(601868) (pe12x) of power infrastructure and private distribution network EPCO 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).
The national Standing Committee stressed the urgency of stabilizing growth, focusing on the three directions of affordable housing, steel structure and new power system with high economic elasticity. This week, the national standing committee pointed out the need to accelerate the implementation of 102 major projects and key projects of special planning in the outline of the 14th five year plan. Statements such as “accelerating the implementation”, “doing a good job in guarantee”, “simplifying procedures” and “speeding up the implementation” all show the urgent willingness of the government to promote investment and accelerate the land settlement, “Taking work relief” shows that investment also plays an important role in stabilizing employment. In terms of key investment, the meeting proposed: 1) we should “focus on food and energy security, advanced manufacturing, transportation and communication and other infrastructure, and do a good job in financing, land use and energy consumption”. 5g communication, new power system and other new infrastructure investment are highly efficient and demand growth is fast. It is expected to be an important support direction for steady growth. At the same time, policies support investment in advanced manufacturing industry and accelerate industry transformation and upgrading, It is expected to promote the continued repair of manufacturing investment this year. 2) “Major water conservancy projects that have been demonstrated for many years should be implemented quickly”. The large volume of old infrastructure such as large water conservancy and transportation projects is the basic sector for stable investment, and is expected to work together with new infrastructure to achieve steady growth. On the whole, the current downward pressure on the economy is great, and the driving force for stable policy growth is sufficient. Since the end of last year, a series of important meetings have continuously demonstrated China’s determination to stabilize growth. The necessity and policy attitude for stable growth are relatively clear. The prosperity of relevant sub sectors is expected to improve, focusing on the three directions of affordable housing, steel structure and new power system with high landscape elasticity.
Affordable housing undertakes the triple tasks of common prosperity, non speculation in housing and housing and stable economic growth, and the follow-up promotion is expected to accelerate. At a news conference this 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. During the “14th five year plan” period, 40 key cities initially planned to add 6.5 million units (rooms), basically completing the transformation of about 219000 old urban communities built before the end of 2000. In this week’s steady growth measures, the national standing committee also focused on accelerating the construction of urban affordable housing and other key areas. It can be seen that at present, China has gradually put the construction of affordable housing in line with the two strategic objectives of “common prosperity” and “no speculation in housing” as one of the key directions of the development of the real estate industry in the future. In the short term, it can also play a supporting role in real estate investment under the background of the contraction of private real estate enterprises’ investment and promote steady economic growth. We estimate that the construction and installation investment of indemnificatory rental housing is expected to reach about 195 billion yuan in 2022, of which the construction of indemnificatory housing in first tier cities is significantly greater. According to the data of the Ministry of housing and urban rural development, Beijing, Shanghai, Guangzhou and Shenzhen plan to add 40 / 47 / 60 / 400000 indemnificatory rental housing respectively during the 14th Five Year Plan period, They account for 40% / 40% / 50% / 45% of the total new housing supply, and the four places account for 1.87 million units, accounting for nearly 30% of the construction of affordable housing in 40 key cities. The construction of affordable housing in China is expected to speed up significantly in the follow-up, focusing on the national leader in affordable housing construction China State Construction Engineering Corporation Limited(601668) , the leader in affordable housing construction in Shanghai Shanghai Construction Group Co.Ltd(600170) , and the leading enterprise in affordable housing design Shenzhen Capol International&Associatesco.Ltd(002949) .
In the 14th five year plan, the UHV construction will be stepped up, and the core targets of new power system construction will continue to be recommended. With the continuous promotion of the dual carbon goal and the accelerated transformation of the energy structure, the power investment with high investment efficiency may become one of the key support directions of the follow-up steady growth policy. Its financing environment is also friendly, and the investment is expected to be significantly strengthened. This week, China Energy News reported that during the “14th five year plan” period, the State Grid planned to build the “24 AC and 14 DC” UHV project, involving more than 30000 kilometers of lines, 340 million KVA transformation capacity and a total investment of 380 billion yuan. This year, the State Grid plans to start 13 UHV lines of “10 AC and 3 DC”. UHV can partly solve the problems caused by long-distance energy allocation across regions and large-scale grid connection of new energy, and plays an important role in building a new power system. According to the 2020 social responsibility report issued by the State Grid: by the end of 2020, a total of 26 UHV projects of “14 AC and 12 DC” have been completed and put into operation. There are 38 “24 AC and 14 DC” projects planned and constructed in the 14th five year plan, with a 38% increase over the end of 2020. UHV investment is expected to usher in a rapid growth during the 14th Five Year Plan period. China Energy Engineering Corporation Limited(601868) and Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) are the leaders of UHV construction, accounting for 74% / 17% of the UHV design market respectively (according to the China Energy Engineering Corporation Limited(601868) prospectus); In the construction market, according to the characteristics of UHV EPC (integration of design and construction) business model, we expect China Energy Engineering Corporation Limited(601868) and Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) to occupy about 60% / 40% shares respectively, which is expected to significantly benefit from the acceleration of UHV construction in the future. With the continuous improvement of the policy environment of the power engineering industry chain and the continuous accumulation of financial resources, the relevant leaders are expected to accelerate the growth. In addition to UHV construction, other suggestions focus on: 1) power side: the development of scenery and green power in the 14th five year plan is accelerated, the new energy engineering business is expected to meet the sustained high growth, and the large energy base will strengthen its leading position. 2) Distribution network side: with the increase of new energy consumption demand and the acceleration of distributed energy construction, distribution network is expected to become one of the key investment points of power grid in the future (distribution network accounts for about 50% in the “14th five year plan” investment plan of China Southern Power Grid).
3) Energy storage: according to the relevant planning of the 14th five year plan, compared with the 13th five year plan, the cumulative installed capacity of pumped storage is doubled, and the installed capacity of new energy storage is 10 times. The energy storage industry is expected to usher in rapid development in the 14th five year plan. Continue to recommend the core targets of new energy power system construction, focus on and recommend the leaders Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) and China Energy Engineering Corporation Limited(601868) of UHV and green power construction and operation of central enterprises, continue to develop the growth leader Suwen Electric Energy Technology Co.Ltd(300982) of distribution network EPCO for photovoltaic, energy storage and power intelligent operation and maintenance, and the leader of enterprise energy efficiency management system Acrel Co.Ltd(300286) .
Investment suggestions: at present, the necessity and policy attitude of steady growth are relatively clear. With the continuous implementation of policy requirements, the prosperity of related fields of steady growth is expected to improve. Focus on the three directions with high prosperity elasticity: 1) affordable housing: at present, private real estate investment tends to shrink, and ensure that real estate construction undertakes the three tasks of common prosperity, non speculation in housing and steady economic growth, It is expected to accelerate the follow-up, with emphasis on China State Construction Engineering Corporation Limited(601668) , Shanghai Construction Group Co.Ltd(600170) , Shenzhen Capol International&Associatesco.Ltd(002949) ; 2) Steel structure: steel structure continues to benefit from infrastructure improvement and manufacturing investment repair. At the same time, bapv / BIPV development brings incremental demand to the industry. It is recommended that Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) , Anhui Honglu Steel Construction(Group) Co.Ltd(002541) ; 3) New power system: the new infrastructure represented by new energy infrastructure has large demand and high investment efficiency. It is expected to become the key direction for the steady growth of follow-up infrastructure, showing a higher outlook. It focuses on recommending and paying attention to the leaders Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) , China Energy Engineering Corporation Limited(601868) of central enterprises in power infrastructure, the leader of private distribution network EPCO Suwen Electric Energy Technology Co.Ltd(300982) , and the expert of enterprise energy efficiency control Acrel Co.Ltd(300286) . 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 the valuation repair. It is recommended to focus on central construction enterprises China Communications Construction Company Limited(601800) , China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) and infrastructure design leaders China Design Group Co.Ltd(603018) , Jsti Group(300284) .
Risk tips: policy promotion is less than expected, epidemic impact is more than expected, accounts receivable risk, overseas operation risk, etc.
