Construction & Building Materials Weekly: Warm spring market ahead, decisive jiacun to overweight


Time:

2018-03-14

In the past week, the performance of the construction & building materials sector and the top three gains/falls.

In the past week, the performance of the construction & building materials sector and the top three gains/falls.
01.29–02.02, this week, the Shanghai and Shenzhen 300 Index fell by 2.51%, the architectural decoration index fell by 5.88%, underperforming Shanghai and Shenzhen by 3.37 percentage points; the building materials index fell by 4.15%, underperforming Shanghai and Shenzhen by 1.64 percentage points. The construction segment has all declined. Construction Industry's top three stocks in the past week: Fangda Group (5.24%), Sinoma International (3.34%), Baoying Shares (1.52%); the last week's gains down 3 stocks: Yuntou Ecology (-22.01%), Donghua Technology (-24.70%), and Luoton Development (-30.71%).
In the past week, the top three stocks in building materials rose: Qibin Group (8.10%), Conch Cement (6.09%), Qilian Mountain (5.16%); the last three gains in the past week: Han Jianhe (-21.79%), King Kong Glass (-22.53%), Hainan Ruize (-27.74%).
Industry perspective - architecture: focus on three main lines.
The 19th National Congress put forward the development goals of beautiful China. We believe that the future gardening sector is expected to continue to receive policy support. The achievements of the gardening sector are beautiful. PPP is the year of the project, and the performance guarantee is high. The companies with high PPP projects will see ROE improvement and cash flow statement improvement, from the performance situation, the company's growth rate is good, valuation is attractive. It is recommended to open the PPP2.0 model of the Meishang Ecology and have the ability to develop PPP projects. Continue to recommend high-quality enterprises in the sector, oriental gardens, Mongolian grass ecology, and liberal arts gardens.
From the performance point of view, the growth rate of high-quality enterprises in the industry is good, and orders are gradually concentrated to central enterprises with scale advantages and financing advantages. At the same time, with the implementation of the “One Belt and One Road” strategy, the number of overseas orders of various central enterprises has increased significantly. The proportion of orders has increased. It is recommended to pay attention to the central enterprises with good order growth and low valuation. The layout of China Construction, China Chemical, China Railway Construction, China Railway, China Power Construction, Gezhouba. In addition, we can also pay attention to the steel structure of the company with strong policy support, enterprise performance and order growth, and recommend Hangxiao Steel Structure and Southeast Net Frame.
In the medium and long term, we believe that there is still room for the reform of central enterprises, paying attention to the mixed improvement process of the central enterprises in the construction, and recommending the Chinese nuclear construction, China Power Construction, and China Communications Construction.