The Zhitong Finance App learned that Caitong Securities released a research report stating that the local government special bond project has completed preliminary screening, and the special treasury bond project will be implemented at an accelerated pace. According to the bank's statistics, the issuance of new special bonds in the past five years has mostly reached 90% of the annual quota around September of that year, and the Development and Reform Commission has now completed preliminary screening work for this year's special bond projects, so subsequent special bond issuance is expected to accelerate. Considering the transmission time lag between the disbursement of funds and the commencement of the project, the second quarter is the traditional peak construction season. As funds for special treasury bonds and special bonds are put in place one after another and the project is gradually launched, domestic infrastructure workload is expected to improve year-on-month.

The views of CaiTong Securities are as follows:

Local government special bond projects have completed preliminary screening, and special treasury bond projects will be implemented at an accelerated pace.

On April 17, Liu Sushe, deputy director of the National Development and Reform Commission, attended the press conference of the State Information Office and stated: 1) Recently, the Development and Reform Commission completed the preliminary screening of this year's special debt project. Currently, the Ministry of Finance is reviewing the balance of project financing benefits, etc., and various regions are also preparing for the project; a final preparation project list will be formed as soon as possible to urge the speedy issuance and use of bonds and promote the formation of physical workload. 2) In February of this year, the NDRC completed the issuance of the 2023 trillion additional treasury bond project list, and the funds have been implemented for about 15,000 specific projects; since March, the National Development and Reform Commission has established an online scheduling mechanism to speed up construction, and has completed the first batch of 12 provincial supervision work; on the 18th, it will also organize a video-teleconference to promote the implementation and promotion of the national 2023 treasury bond issuance project to push for construction of all additional treasury bond issuance projects by the end of June this year.

Q2 Infrastructure funding is in place or accelerated, and improvements in physical workload are worth looking forward to.

Judging from the availability of funds related to infrastructure in Q1, the issuance of 2023 special treasury bonds was completed in February; the investment within the central budget reached more than 30%; the pace of issuance of special bonds has slowed compared to previous years. As of April 17, only 654.4 billion yuan was issued (1.44 trillion yuan in the same period last year). According to the bank's statistics, the issuance of new special bonds in the past five years has mostly reached 90% of the annual quota around September of that year, and the Development and Reform Commission has now completed the preliminary screening of this year's special bond projects, so the issuance of subsequent special bonds is expected to accelerate. Considering the transmission time lag between the disbursement of funds and the commencement of the project, the second quarter is the traditional peak construction season. As funds for special treasury bonds and special bonds are put in place one after another and the project is gradually launched, domestic infrastructure workload is expected to improve year-on-month.

Steel structures, cement, glass fiber and design upstream of the industrial chain are expected to benefit first.

With infrastructure under construction and the implementation of new construction projects, upstream materials and design companies may be the first to benefit: 1) Steel structure: dragged down by weak demand, the engineering volume and gross margin of steel structure companies are under pressure. As demand for government investment projects steadily recovers, the operations of leading enterprises represented by Honglu Steel Structure and Seiko Steel Structure are expected to improve; 2) Cement: Early stages are affected by real estate. In addition, supply-side regulation and control capabilities have not changed immediately. There is an oversupply of cement, and the cost of coal etc. is high. Profits are falling under pressure. If infrastructure demand picks up in the future, it is expected to drive a recovery in cement demand, cement Prices may also rise steadily, driving sector valuation restoration. It is recommended to focus on Huaxin Cement and Conch Cement; 4) Design: Design companies are located at the front end of the construction industry chain and are the first to benefit from the implementation of new projects. It is recommended to focus on Huasheng Group. 3) Glass fiber: The glass fiber sector is highly relevant to the economy and is expected to benefit equally from the accelerated implementation of treasury bond projects. It is recommended to focus on China Jushi and Changhai shares;

Investment suggestions: Issuing special bonds or promoting the implementation and construction of new projects, thereby releasing demand for the industrial chain, and improving the operation or month-on-month improvement of Q2 infrastructure chain enterprises. It is recommended to focus on the construction side of China Railway (601390.SH), Tunnel Co., Ltd. (600820.SH), China Construction (601668.SH), Huaxin Steel Construction (), etc., as well as materials Duanhonglu Steel (002541.SZ), Huaxin Cement (airport), and conch 603018.SH 600496.SH 601800.SH 600801.SH Upstream suppliers such as cement (600585.SH), Seiko Steel (600496.SH), China Jushi (600176.SH), and Changhai Co., Ltd. (300196.SZ).

Risk warning: Steady growth falls short of expected risks, policy effects fall short of expected risks, and economic recovery falls short of expected risks.