Key investment points
Investment advice
Resumption of trading: within 4 ~ 8 months after the central economic work conference set the tone of "stable growth", the A-share construction industry showed absolute return, and the excess return in some years was significant. From the beginning of 2008 to the end of 2021, the central economic work conference held in 2008, 2011, 2014, 2018 and 2021 clearly put forward "steady economic growth" or similar expressions. After the above four times of setting the tone of "steady growth", the growth rate of infrastructure fixed investment accelerated. In the next 4 ~ 8 months, the A-share construction industry ran out of absolute income. Section: we reiterate the viewpoint put forward in the report on investment strategy of construction industry in 2022 issued on November 24, 2021: two main lines are preferred for investment in construction industry in 22 years - infrastructure development, new energy infrastructure and fabricated buildings, steel structure. It is suggested to pay attention to traditional construction central enterprises:
1) select central enterprises of new energy infrastructure: China Energy Engineering Corporation Limited(601868) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) . The world's top 2 energy and power construction enterprises have deeply benefited from the large-scale construction of new energy under the "double carbon" strategy. The performance of the "14th five year plan" is high, and the growth is determined to be high. The value of the installed assets of wind and solar power generation in hand is expected to be revalued.
2) optional building steel structure track Faucet: Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) . Under the "double carbon 1 + n" policy system, fabricated steel structure has an advantageous development pattern with lower carbon emission intensity. In the past 22 years, government investment in infrastructure, public construction and other fields is expected to make great efforts. As a leading enterprise in the two major subsidiaries of steel structure manufacturing and Engineering in China, β+α Resonance, optimistic about the performance of Anhui Honglu Steel Construction(Group) Co.Ltd(002541) and Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) in 22 years.
3) pay attention to traditional infrastructure central enterprises: China Railway Construction Corporation Limited(601186) , Metallurgical Corporation Of China Ltd(601618) , China Railway Group Limited(601390) , China Communications Construction Company Limited(601800) . During the 12th Five Year Plan period and the 13th Five Year Plan period, China Railway Construction Corporation Limited(601186) , China Railway Group Limited(601390) , China Communications Construction Company Limited(601800) and other traditional "iron public base" construction central enterprises strategically arranged "big municipal" and "big city construction", landed in the city and realized business structure adjustment and transformation. The above-mentioned enterprises are expected to benefit from the development of urban agglomeration and urban internal infrastructure.
Individual shares:
Focus on China Energy Engineering Corporation Limited(601868) with outstanding advantages in the whole industrial chain; Focus on vigorously developing overseas business China Railway Construction Corporation Limited(601186) with steady growth in the short, medium and long term; Focus on Metallurgical Corporation Of China Ltd(601618) with steady development of metallurgical engineering and "investment and construction" driving business model transformation; Focus on Anhui Honglu Steel Construction(Group) Co.Ltd(002541) with strong certainty of capacity expansion and expected improvement of gross profit margin with capacity utilization; Focus on the Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) expected to reap the excess growth of steel structure orders under the dual wheel drive mode of EPC + "patent authorization"; Focus on the engineering evaluation enterprise Shenzhen Ridge Engineering Consulting Co.Ltd(300977) whose real estate policy has bottomed out, valuation has ushered in repair, national layout and high performance are expected to grow.
Downstream: the margin of infrastructure investment improved, and the issuance of urban investment bonds increased by 49.1% year-on-year
Capital side: in December, the M2 balance was 238.3 trillion yuan, and the new social finance was 2.37 trillion yuan. In December, the special debt decreased by 81% month on month, and the urban investment debt increased by 49.1% year-on-year.
Investment side: the cumulative fixed asset investment was + 4.9% year-on-year, and the infrastructure investment was - 0.6% year-on-year in December.
(1) real estate: in December, the investment in real estate development was + 6.0% year-on-year, and the area of land acquisition and sales continued to decline;
(2) capital construction: in December, the capital construction investment (excluding power) was - 0.6% year-on-year in a single month, and the decline narrowed month on month;
(3) industry: in December, the fixed asset investment in manufacturing and mining industry increased by + 11.8% and + 631.4% year-on-year. Demand side: PMI of construction industry dropped to 56.3% in December.
Upstream: cement prices continued to fall, glass prices fell slightly, and steel prices stabilized
Building materials: on January 14, the comprehensive index of building materials was 169.22 points, with a month on month ratio of - 4.2%, an increase of + 9.3% over the same period of 21 years; Cement and glass price indexes were - 9.1% and - 4.2% month on month, respectively.
Retail sales of building materials: in December, the retail sales of construction and decoration materials amounted to 21.8 billion yuan, an increase of 7.5% year-on-year; From January to December, the cumulative retail sales reached 19.67 billion yuan, an increase of 20.4% year-on-year.
Steel: on January 14, the unit prices of rebar, medium sector, high-speed wire and round steel were - 1.1%, - 2.3%, - 1.3% and + 0.1% month on month respectively.
Construction equipment: in December, the sales volume of excavators decreased by 43.5% year-on-year, and the number of operating hours decreased by 14.4% year-on-year. Aluminum alloy temsector: in December, the PMI of aluminum alloy temsector development index was 34.1%, down 3.7pct month on month, of which the production index decreased by 12.1pct to 24.6% month on month, and the new order index decreased by 0.9pct to 29.7% month on month.
Assembled sector tracking
Policy: Recently, Hainan Province proposed that by the end of 2025, the proportion of prefabricated buildings in the province will account for more than 80% of new buildings. Orders: in 2021, Anhui Honglu Steel Construction(Group) Co.Ltd(002541) , Changjiang & Jinggong Steel Building(Group)Co.Ltd(600496) the cumulative contract amount of newly signed orders was 22.83 billion yuan and 16.95 billion yuan respectively, with a year-on-year increase of + 31.5% and + 13.3%.
Infrastructure sector tracking
New orders signed by central construction enterprises: China Energy Engineering Corporation Limited(601868) new orders increased by 51% in 2021.
1) in 2021, the newly signed contracts of China Energy Engineering Corporation Limited(601868) , China Railway Construction Corporation Limited(601186) , Metallurgical Corporation Of China Ltd(601618) , China Railway Group Limited(601390) , China State Construction Engineering Corporation Limited(601668) , China National Chemical Engineering Co.Ltd(601117) were 8726, 28197, 12048, 27293, 31074 and 269.8 billion yuan respectively, with a year-on-year increase of 51.0%, 10.4%, 18.1%, 4.7%, 12.2% and 7.4%;
2) from January to November 2021, Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) newly signed contracts amounted to 621.8 billion yuan, an increase of 4.2% year-on-year;
3) in 21q1-3, China Communications Construction Company Limited(601800) the cumulative newly signed contract amount was 1006.7 billion yuan, a year-on-year increase of 36.6%. PPP warehousing projects: from January to November, the amount of new warehousing projects was 1059.94 billion yuan, with a cumulative year-on-year decrease of 32.4%.
Risk tips
The covid-19 epidemic situation in China rebounded; 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 was lower than expected.
