The rise of the construction sector outperformed the market this week. In December, infrastructure investment recovered, real estate investment continued to decline, construction fell, completion improved, and real estate sales decreased year-on-year. Focus on the key contents of the working meeting of the Ministry of housing and urban rural development.
The overall rise of construction outperformed the market, and the sub sectors rose less and fell more: this week, the Shenwan construction index closed at 2269.6 points, up 3.0% month on week, outperforming the market. The industry’s average price to book ratio was 1.0 times, slightly higher than that of last week. Segments rose less and fell more, with civil construction rising by 1.9%, the largest increase; Industrial construction fell 2.3%, the largest decline.
Focus on the key contents of the working conference of the Ministry of housing and urban rural development: on January 20, the National Working Conference on housing and urban rural development was held in the form of video in Beijing. The meeting mainly summarized the work in 2021, analyzed the situation and problems, and studied and deployed the work in 2022. The meeting focused on eight tasks, requiring that in 2022, we should continue to adhere to the positioning of “real estate without speculation” and not use real estate as a tool and means to stimulate the economy in the short term. The meeting again proposed to vigorously increase the supply of affordable rental housing, focusing on large cities with net population inflow, and raise 2.4 million affordable rental housing throughout the year. Beijing, Shanghai, Shenzhen, Guangzhou and other places have issued draft or solicitation draft on accelerating the implementation of local affordable rental housing. In addition, the implementation of urban renewal action, the implementation of carbon peak and carbon neutralization goals and tasks, and the vigorous development of prefabricated buildings are also the key contents of 2022. The main task of the working meeting of the Ministry of housing and urban rural development shows that the overall development tone of the real estate industry in 2022 is still stable development. In addition, affordable rental housing and prefabricated buildings are the key development directions in 2022. The vigorous development of affordable rental housing is expected to bring new performance increment to building materials enterprises, and the continuous policy support for prefabricated buildings is also expected to be beneficial to the leading prefabricated enterprises.
Infrastructure investment rebounded year-on-year, and real estate investment continued to decline year-on-year: in December, fixed asset investment was 7.0 trillion, an increase of 2.0%, of which the completed investment in infrastructure and real estate development was 1.9 trillion and 1.0 trillion respectively, with a year-on-year growth rate of 3.8% and – 13.9% respectively. Compared with November, infrastructure investment picked up in December, and real estate investment fell further. In infrastructure construction, the investment in power, transportation and public utilities was 0.42 trillion yuan, 0.59 trillion yuan and 0.88 trillion yuan respectively, with a year-on-year growth rate of 8.1%, 7.1% and – 0.3% respectively. The year-on-year growth of electric power and transportation is relatively large, and the year-on-year decline of public water conservancy investment is also significantly reduced compared with November. The central economic work conference in 2021 called for “accelerating the preliminary work and construction progress of major water conservancy projects” and the recent release of the comprehensive transportation plan for the 14th five year plan in many regions. The total investment has been significantly increased compared with the 13th five year plan. It is expected that there will be a large development space for transportation, water conservancy and other subdivisions in 2022.
Construction continued to decline, completion increased year-on-year, and the land transaction area decreased significantly year-on-year: in December, the planned land transaction area in 100 large and medium-sized cities totaled 150 million square meters, with a decrease of 55.8%, and the average transaction floor price was 3138 yuan / square meter. The construction, completion and sales areas were 160, 330 and 210 million square meters respectively, with year-on-year growth rates of – 31.2%, 1.9% and – 15.6% respectively. In December, the land transaction and supply area decreased significantly, the average transaction floor price increased, and the unit price of listed floor decreased; The new construction data decreased compared with the same period last year, and the completion data increased year-on-year. Due to the demand for payment collection of real estate enterprises at the end of the year, the completion data performed well and the new construction data was slightly weak. However, with the development of infrastructure investment and the signs of marginal policy easing in the real estate industry, we believe that the new construction data may improve.
Key recommendation
Key recommendation: infrastructure sector, Shenzhen Capol International&Associatesco.Ltd(002949)
Main risks of rating
Risk tip: manufacturing investment slowed down, the promotion of prefabricated buildings was less than expected, and macro liquidity tightened.
