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Our reporter Liu Yuru and Xu Yunqian from Beijing reported

Recently, my country's eight major central construction enterprises have successively released the newly signed contracts in the first half of 2024. Overall, the eight major central construction enterprises signed a total of 7.89 trillion yuan in new orders in the first half of this year, a year-on-year decrease of 0.5%.

A reporter from the China Times noticed that the order size showed different trends, and the dynamics of the infrastructure market once again became the focus of industry attention.

It is worth mentioning that China Construction (601668.SH) has firmly topped the list of newly signed contract amount in the first half of the year with its strong strength, but giant companies such as China Railway Construction (601390.SH), China Railway Construction (601186.SH), and China Metallurgical Group Corporation (601618.SH) are facing challenges. The amount of newly signed contracts has declined compared with the same period last year, reflecting the fierce market competition and weak demand in some areas.

An Guangyong, an expert from the Credit Management Committee of the All-China Mergers and Acquisitions Association, told the China Times that the growth of contract orders of central construction enterprises depends on the strong support of national policies and large-scale infrastructure investment. However, attention should be paid to the authenticity of these data and the hidden risks behind them. In the current economic environment, despite the growth of orders, the industry has experienced internal circulation, and overall market confidence is slightly insufficient.

There is a significant difference in order amount

As of July 31, the eight major central construction enterprises have all released briefings on their operating conditions in the second quarter and the first half of this year. Data shows that the order performance of central infrastructure enterprises in the first half of the year was significantly different.

Among other central construction enterprises, the newly signed contract amounts of China Power Engineering (601669.SH), China Energy Engineering (601868.SH), China Communications Construction (601800.SH), and China National Chemical Corporation (601117.SH) in the first half of the year were 648.887 billion yuan, 738.601 billion yuan, 960.867 billion yuan, and 203.57 billion yuan, respectively, up 7.50%, 14.35%, 8.37%, and 10.05% year-on-year.

It is worth noting that there are still three central enterprises that have seen a decline in the amount of newly signed contracts. In the first half of the year, the newly signed contract amounts of China Railway Group and China Railway Construction Corporation exceeded one trillion yuan, but compared with the same period last year, there were different declines, with China Railway Group's decline being 15.3% and China Railway Construction's being 19.02%.

Another central construction enterprise, China Metallurgical Construction Corporation, signed new contracts worth 623.95 billion yuan in the first half of the year, a year-on-year decrease of 6.6%; among them, the newly signed contract value of metallurgical engineering and industrial manufacturing increased, while housing construction projects and municipal and infrastructure projects saw double-digit declines.

Overall, in the first half of 2024, the eight major central construction enterprises signed a total of 7.89 trillion yuan in new orders, a year-on-year decrease of 0.5%.

Reports recently released by a number of authoritative institutions pointed out that in the current macroeconomic context where the downward trend in real estate investment has not shown any significant improvement and local government debt issues need to be urgently resolved, my country's engineering construction industry market faced challenges in the first half of the year.

According to the latest data released by the National Bureau of Statistics, the construction industry signed new orders of 14.91 trillion yuan in the first half of this year, a year-on-year decrease of 3.4%. This data not only reveals the current difficulties faced by the industry, but also indicates that in the future, construction companies may face more intense market competition and greater operating pressure.

Analysts believe that despite market fluctuations, compared with local state-owned infrastructure enterprises and private construction companies, central enterprises have continued to demonstrate stable performance with their strong strength and steady strategies, setting a benchmark for the industry.

China's construction industry continues to lead

As the world's largest investment and construction group, China Construction has continued to lead in development in recent years.

Data shows that the total amount of newly signed contracts of China Construction in the first half of 2024 reached 2.48 trillion yuan, an increase of 10% compared with the same period last year. In terms of construction business, the newly signed contract amount was 2.29 trillion yuan, an increase of 13.7% year-on-year. Specifically, in terms of business divisions, the newly signed contract amount for housing construction was 1,532 billion yuan, a year-on-year increase of 5.7%; the newly signed contract amount for infrastructure was 749.1 billion yuan, a year-on-year increase of 34.9%; the newly signed contract amount for survey and design was 7.2 billion yuan, a year-on-year decrease of 9.2%.

According to the first quarter report this year, China Construction's net profit was nearly 15 billion yuan and its newly signed contracts exceeded 1 trillion yuan, ranking first in both categories.

You Xi, co-founder of the Communication Planet APP, said in an interview with a reporter from the China Times that in addition to its scale advantage, China Construction has shown strong growth momentum in its construction business, with a year-on-year growth of 13.7%. This shows that China Construction has achieved remarkable results in business expansion, technological innovation, and service quality improvement, and has unique advantages compared with other central construction enterprises.

An Guangyong believes that the main advantages of China Construction's leading ranking in terms of contract value include its large scale, strong financial strength and rich project management experience. In addition, China Construction has performed outstandingly in diversified business layout and global market development. However, it should also be noted that the tense geopolitical environment poses a threat to cross-border business, and the increase in local debt risks may affect the funding sources and operational stability of large-scale projects.

Challenges facing the industry

Judging from the overseas business performance of my country's central construction enterprises, the total amount of newly signed overseas orders of many of them achieved year-on-year growth, especially China Construction, with the growth rate exceeding 100%.

Taking China Construction as an example, from a regional perspective, although domestic business still accounts for the majority, with newly signed contracts amounting to 2.1651 trillion yuan, a year-on-year increase of 10.9%; the total amount of newly signed contracts for overseas business in the first half of the year reached 123.1 billion yuan, a growth rate of 105.4%.

China Metallurgical Construction Corporation of China (MCC) signed a total of 634.25 billion yuan in domestic contracts, down 9.39% year-on-year; the total amount of overseas contracts was 43.54 billion yuan, up 92.5% year-on-year. China Power Construction Corporation (PEC) signed a total of 528.319 billion yuan in domestic contracts, accounting for 81.92% and up 5.74% year-on-year; the total amount of overseas contracts was 120.568 billion yuan, accounting for 18.7% and up 15.95% year-on-year.

"my country's construction industry is constantly expanding its overseas markets. The overseas business of central construction enterprises has performed outstandingly, becoming an important force in promoting the development of the industry." You Xi emphasized that, especially in the context of economic globalization, my country's construction companies have successfully entered overseas markets through technological innovation, improved product quality and optimized services, demonstrating good international competitiveness.

An Guangyong believes that the growth of new overseas orders reflects the improvement of the competitiveness of China's central construction enterprises in the international market and the positive impact of the "Belt and Road" initiative. However, it is necessary to be vigilant that the uncertainty of the global economic environment and geopolitical tensions may have an impact on these businesses. The bottleneck phenomenon in cutting-edge technology industries such as semiconductors and restrictions on cross-border data flow may also bring potential risks to the international projects of central construction enterprises.

With the continuous changes in the macro environment, the development prospects of the construction industry in the second half of 2024 show a complex and changeable trend.

In Youxi's view, with the continued recovery of the economy and the increase in demand for infrastructure construction, the construction industry is expected to maintain steady growth. At the same time, construction companies will continue to increase their efforts in technological innovation and improving service quality to adapt to market changes and meet customer needs. However, the construction industry is also facing challenges such as policy adjustments, increasing environmental protection requirements and intensified competition. Companies need to continue to innovate and improve their competitiveness to cope with industry changes and uncertainties.

An Guangyong believes that the construction industry may continue to face challenges in the second half of the year: on the one hand, policy support and infrastructure investment will continue to promote the development of the industry; on the other hand, downward economic pressure, local debt risks and the sluggish real estate market will have a negative impact on the industry.

"Overall, although policy and investment support have brought about an increase in contract orders in the short term, the complexity and uncertainty of the macroeconomic environment pose a challenge to the long-term development of the construction industry. Companies need to redouble their efforts in increasing revenue and reducing costs and managing risks to cope with possible market fluctuations in the future," An Guangyong added to our reporter.

Editor-in-charge: Xu Yunqian Editor-in-chief: Gong Peijia