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Construction Industry Weekly Report: Construction acceleration in May sustainable

  • classification:Dynamic
  • 2022-07-06 18:30:35

【Summary description】Infrastructure investment growth rose to 7.22% in May; Total planned investment in newly started projects rose 23.3 percent in the January-May period.

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Construction Industry Weekly Report: Construction acceleration in May sustainable

【Summary description】2022-07-06 18:30:35

Infrastructure investment growth rose to 7.22% in May; Total planned investment in newly started projects rose 23.3 percent in the January-May period.

Growth in infrastructure investment rose to 7.22 per cent in May and is expected to continue in June. Fixed-asset investment grew 6.2 percent year-on-year in the January-May period of 2022, down 0.6 percentage points from the January-April period. Infrastructure investment (excluding electricity, heat, gas and water production and supply) grew by 6.7% year-on-year in January-May 2022.

Among them, investment in water conservancy management rose by 11.80 percent, that in public facilities management by 7.9 percent, that in road transport by 0.3 percent and that in railway transport by 3.0 percent. Infrastructure investment recovered significantly in May. Single-month infrastructure investment growth accelerated to 7.22% in May from 2.95% in April. As of June 15, new special bonds had reached about 2.44 trillion yuan, accounting for about 67% of the new special bond quota in 2022, according to wind. According to the Ministry of Finance, it is expected that most of the newly issued special bonds will be completed in the second quarter. Therefore, it is expected that the special bonds will enter the intensive issuance period in June, and the capital of infrastructure projects will be supported. According to the leading indicators, the total planned investment in new projects started in the first five months of this year increased by 23.3%, and the funds in place for investment projects (excluding investment in real estate development) increased by 18.4%, which is conducive to the continuous expansion of investment scale. Going forward, we will accelerate the start of construction of major projects, accelerate the issuance and use of local government special bonds, leverage and guide nongovernmental investment, actively expand effective investment, and promote steady growth of investment. We believe that infrastructure investment is expected to continue to pick up speed in June. From the perspective of enterprise orders, China Construction from January to May construction business new orders growth rate of 13.8%, including infrastructure orders growth of 34.6%; New orders signed by China Metallurgical Corporation increased by 6.6% in the first five months of this year, still maintaining a relatively fast growth.

This year water conservancy, pumped storage construction is expected to speed up. This year, China will invest more than 800 billion yuan in water conservancy construction, striving to reach 1 trillion yuan, a year-on-year increase of 32% over the 757.6 billion yuan completed in 2021.

Major water conservancy projects are an important direction for steady growth of infrastructure construction this year. In addition, according to People's Daily (June 13, 2022, edition 11), the 14th Five-Year Plan period will focus on the implementation of the "Double 200 project", the construction of more than 200 pumped storage projects will be started in 200 cities and counties, the construction target of 270 million kW. According to the Medium - and Long-term Development Plan for Pumped Storage (2021-2035), the total scale of pumped storage will reach more than 62 million kW by 2025; About 120 gigawatts by 2030. The "construction target of 270 million kW" is significantly higher than the previous medium - and long-term planning in the production target, pumped storage industry ushered in great development. It is worth noting that Power China has participated in more than 90% of the construction of pumped storage power stations in China, and in the "14th Five-Year Plan" key projects, Power China has undertaken more than 85% of the project survey and design work, which is expected to fully benefit.

Market review summary: this week (2022.06.13-2022.06.17) construction engineering index fell 1.06%, the Shanghai Composite index rose 0.97%; Since the beginning of 2022, the construction index has fallen by 1.69%, while the Shanghai Composite Index has fallen by 8.87% during the same period, ranking 5/29 among 29 industries. In terms of sectors, all sectors fell, among which the petroleum engineering sector fell the most, with a weekly decline of 2.90%. The other sectors were decoration, engineering consulting, infrastructure, chemical engineering, housing construction, landscape architecture, professional engineering, steel structure, and international engineering. The range declines were 0.50%, 0.75%, 0.83%, 0.97%, 1.24%, 1.76%, 1.85%, 2.32% and 2.61%, respectively.

Investment strategy: Infrastructure construction will accelerate in May, which we believe is sustainable and the performance of construction leaders is relatively certain. We suggest that we pay attention to the following: steady growth of water/energy/infrastructure: Power China Construction, Hushe Group, China State Construction, China Communications Construction, China Railway, China Railway Construction, China Chemical, China Energy Construction, China Metallurgical; 2) Construction of new track head:

Honglu steel structure, Zhite new material, Su Wen power, COFCO engineering, Sente shares. 3) Local leading companies: Anhui Construction Engineering, Shandong Road and Bridge, etc.

Risk hints: policies to stabilize growth fall short of expectations, and new energy projects fall short of expected risks.





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