Major investment opportunities in the construction industry are highly related to policies

The report of the 19th National Congress of the Communist Party of China has clearly stated the development priorities and development methods of China in the future. Studying the report of the 19th National Congress of the Communist Party of China is of great significance for understanding the changes in China's development methods and changes in investment structure.

From our study report, we summarized that the words related to the industry are basically concentrated in three: beauty, ecology, and green. These three words represent the direction of future government investment and the development of the construction industry. Specific to the subdivided field, we believe that it focuses on two directions: first, ecological environment construction, and second, prefabricated buildings.

Upgrading ecological civilization to a millennium plan

The report of the 19th National Congress of the Communist Party of China promoted the construction of ecological civilization as a 'millennium plan.' The report clearly states that 'building an ecological civilization is a millennium plan for the sustainable development of the Chinese nation.' Although the construction of ecological civilization has achieved remarkable results in the past five years: not only has the domestic ecological environment improved, but China has also become an important participant, contributor, and leader of the construction of global ecological civilization, but China has a long way to go in ecological protection.

China's ecological situation is severe, and governance and restoration are long-term processes

At present, the ecological situation facing China is severe. According to the results of the fifth national desertification and desertification monitoring in China, as of the end of 2014, the area of desertified land nationwide was 2.115 million square kilometers, and the area of desertified land was 17.211 million square kilometers, respectively accounting for 27.20% of the total land area And 17.93%. At present, China ’s desertification land is reduced by about 2424 square kilometers per year. If all the treatment is completed, it will take 1100 years. The current deserted land can be treated by 530,000 square kilometers. At the rate of reducing 1980 square kilometers per year, it will take about 268 to complete all the tasks. Years. Judging from the contents of the ten water and ten soil policies, the governance objectives are basically planned according to a relatively good level of governance by 2050.

The biggest worry of the market for garden companies is that the project will be one less, and after two years of rapid development, demand will disappear. We believe that with the current ecological situation facing China, the process of governance and restoration will not be completed overnight, but will be a long-term, continuous process.

Prefabricated buildings have obvious advantages over traditional buildings in terms of energy consumption and construction waste. The report of the 19th National Congress of the Communist Party of China puts forward first of all “advancing green development”. Green building is also an important part of promoting green development. Qiu Baoxing, deputy director of the Ministry of Housing and Urban-Rural Development, pointed out at the 10th International Conference on Green Buildings and Building Energy Conservation that the shortcut to popularizing green buildings is to develop prefabricated houses. From the perspective of resource consumption, the advantages of prefabricated houses are mainly reflected in the amount of mortar, wood, insulation boards and other materials.

From the perspective of energy consumption and waste generation, the energy consumption of prefabricated buildings is reduced by 35% compared to traditional buildings, and the waste generation is reduced by 27%, which has obvious advantages over cast-in-situ buildings.

Assembly building is expected to usher in leapfrog development

The data shows that the proportion of prefabricated buildings in new buildings in China is currently about 3% -5%. In 2015, the output value of China's housing construction industry was about 11.6 trillion. If the proportion of prefabricated buildings is 20% by 2020, then The output value of prefabricated buildings will exceed 2.3 trillion (regardless of industry growth), an increase of about 300%.

Investment rating and recommendations

In the past two years, the construction sector has been driven by central enterprises. The overall increase has been large, and the valuation restoration of leading companies has basically been completed. However, due to policy-oriented changes, the development cycle of subdivided areas is quite different. From the report of the 19th CPC National Congress, future development We believe that ecological construction and prefabricated buildings will usher in a better development stage in the subdivided industries and are still worthy of active deployment. We maintain the industry's 'overweight' rating.

Ecological environment construction is still in a period of rapid development, and as a millennium plan, it can be completed overnight. At present, the overall market share of the gardening industry is not high. Leading companies will further expand their market share by virtue of capital and technology advantages, and will undergo a recent correction. Afterwards, the valuation has become attractive again. It is recommended to focus on the four leading companies of Mongolian grass ecology, Lingnan Garden, Tiehan Ecology and Oriental Garden, and pay due attention to second-tier companies such as Meishang Ecology and Liberal Arts Garden.

The prefabricated building is on the eve of the outbreak. It is expected to achieve leapfrog growth in the next three years. At present, listed companies are mainly steel structures. We recommend paying attention to the leading company Hang Xiao Steel Structure, paying due attention to the Southeast grid, and wall material recommendations Beijing New Building Materials and Hengtong Technology, while the full renovation of the house recommends Quanzhu Group and Guangtian Group.

  risk warning

The prefabricated construction market cannot be started quickly, and the garden company's project progress is not up to expectations.