From January to December '23, the growth rate of broad infrastructure investment was 8.24%. The growth rate increased 0.28 pct month-on-month, and the growth rate of infrastructure investment rebounded steadily.
The Zhitong Finance App learned that Galaxy Securities released a research report saying that from January to December 2023, the growth rate of general infrastructure investment was 8.24%, up 0.28 pct from month to month, and the growth rate of infrastructure investment rebounded steadily. Looking ahead to the first quarter, exports and consumption are recovering tortuous. The RMB exchange rate is under strong pressure against the US dollar, the real estate industry has a long storage cycle, and the steady growth trend is expected to continue. Trillions of yuan of treasury bonds and early approval of special bonds will bring incremental capital to infrastructure, which is conducive to the acceleration of traditional infrastructure projects such as water conservancy projects. The PSL restart will broaden the funding sources for the construction of the three major projects, help improve investment in real estate development and restoration, and drive demand in the real estate industry chain such as housing construction and decoration to be released one after another.
Galaxy Securities's views are as follows:
The growth rate of infrastructure investment has rebounded steadily.
From January to December 2023, the growth rate of general infrastructure investment was 8.24%. The growth rate increased 0.28 pct month-on-month, and the growth rate of infrastructure investment rebounded steadily. In the infrastructure segment, investment in the production and supply of electricity, heat, gas and water increased 23.0% year on year, down 1.4 pct from the previous month; investment in transportation, storage and postal services increased 10.5% year on year, down 0.3 pct from the previous month; the cumulative growth rate of water conservancy and environment increased 1.2 pct to 0.10% from the previous month. In the first quarter of 2024, the steady growth policy continued. The additional issuance of trillion yuan treasury bonds was completed, PSL was restarted, and the issuance quota for early batches of special bonds was about to be implemented. It is expected that the growth rate of infrastructure investment will maintain a relatively rapid growth rate in the first quarter.
Real estate investment and sales continue to be under pressure, the decline in new construction has narrowed, and the growth rate of completion has declined slightly.
From January to December, the country invested 11091.3 billion yuan in real estate development, down 9.6% year on year, 0.2 pct increase from January to November; in January-December, the sales area of commercial housing was 1117.35 million square meters, down 8.5% year on year, and 0.5 pct more than in January-November; the new housing construction area was 953.76 million square meters, down 20.4% year on year, down 0.8 pct from January to November; completed area of 998.31 million square meters, up 17.0%, down 0.9 pct from January-November. Looking ahead to 2024, housing companies' willingness to invest and the pace of new construction will be mainly affected by the recovery in sales. With the further relaxation and implementation of policies, the market's expectations for commercial housing sales will improve, and the recovery in sales will drive the emergence of an inflection point for investment and new construction. As for completion, although the completion of existing projects will be gradually completed, it is expected that the 2024 building guarantee policy will continue to advance, and the completion growth rate is expected to maintain a steady growth rate.
The central government restarted PSL, and the construction of the “three major projects” accelerated the layout.
On January 2, according to the central bank announcement, in December 2023, the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China added net additional mortgage supplementary loans (hereinafter referred to as “PSL”) of 350 billion yuan, and PSL officially restarted after a period of one year. This round of restart is the central bank's third round of PSL investment, with a monthly increase of 350 billion yuan. The monthly investment amount has reached the third level in history. The investment is strong, helping to form a policy combo punch in line with a “moderately vigorous, improved quality and efficiency” fiscal policy and a “flexible, moderate, accurate and effective” monetary policy. It is expected that it will continue to be invested in 2024 to maintain the steady economic growth trend. Based on the historical outlook of the previous two rounds of PSL, and in conjunction with the Central Economic Work Conference held a few days ago, we predict that this round of PSL will mainly be used to support the construction of the “three major projects”. Since urban village renovation and guaranteed housing construction projects have all been included in the scope of special debt support, combined with the official restart of PSL, the funding sources for the “three major projects” will be further broadened.
“Steady growth” will benefit construction central state-owned enterprises.
As of January 18, the dynamic PE/PB of the construction index was 8.10/0.71 times, respectively. The historical quantile over the past 10 years was 0.59%/0%. The construction industry's valuation is at an historically low level, which is expected to benefit from the construction of a valuation system with Chinese characteristics. Looking ahead to the first quarter, exports and consumption are recovering tortuous, the RMB exchange rate is under strong pressure against the US dollar, the real estate industry has a long storage cycle, and the steady growth trend is expected to continue. Trillions of yuan of treasury bonds and early approval of special bonds will bring incremental capital to infrastructure, which is conducive to the acceleration of traditional infrastructure projects such as water conservancy projects. The PSL restart will broaden the funding sources for the construction of the three major projects, help improve investment in real estate development and restoration, and drive demand in the real estate industry chain such as housing construction and decoration to be released one after another.
Recommended: China Railway Construction (601186.SH), China Construction (601668.SH), China Railway (601390.SH), China Communications Construction (), China Power Construction (US), China Energy Construction (Sichuan), China Metallurgical (Singapore), China Chemical (), etc. 601800.SH 601669.SH 601868.SH 601618.SH 601117.SH It is recommended to focus on Shandong Road and Bridge (000498.SZ), Anhui Construction Engineering (600502.SH), Shanghai Construction Engineering (600170.SH), General Design Institute (603357.SH), etc.
Risk warning: risk of falling fixed asset investment; risk of declining accounts receivable recovery.