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text | zhu jin cao hengyu

favorable policies continue to be released this week. first-tier cities such as beijing, shanghai, guangzhou and shenzhen have significantly relaxed real estate purchase restrictions and down payment ratios. the national development and reform commission will also introduce incremental policies at the state council information office press conference on the 8th. we believe that the current favorable policies are expected to continue, and the capital market, real estate and fiscal policies are all expected to increase, and the low-valued construction central enterprises and the housing construction and infrastructure sectors will directly benefit. the hong kong stock market continued to rise during the national day holiday. the average increase of the five central construction enterprises listed on the hong kong stock market reached 21.5%. the ah premium rate dropped from 110% to 90%. the investment performance of a-share central construction enterprises improved. the determination of the policy has been shown, and the benefits continue to be released. under such circumstances, we continue to be optimistic about low-valued construction state-owned enterprises.

market review:this week, the citic construction index rose 8.7%, the csi 300 rose 8.5%, and the sector outperformed the market by 0.2 percentage points. among the construction sub-sectors, architectural design and services performed best, outperforming the market by 2.5 percentage points. the top three gainers this week are mengcao ecology (+20.2%), hope holdings (+20.0%) and hanjia design (+20.0%).

financing status:1) special bonds: this week, the total amount of local government special bond financing was 67.6 billion yuan, the maturing local government special bonds were 9.1 billion yuan, and the net amount of special bond financing was 58.5 billion yuan. among them, the total amount of new special bond issuance in 2024 will be 3,493.3 billion yuan, and the issuance progress in 2024 will be 89.6%. 2) urban investment bonds: the total amount of urban investment bond financing this week was 6.7 billion yuan, and the net financing amount was -14.2 billion yuan, an increase of 25.5 billion yuan from last week. 3) land transfer fees: the land transaction value in 100 cities this week was 55.4 billion yuan, a cumulative year-on-year decrease of 34% in 2024.

industry news:1) national standing session: deploy relevant measures to accelerate the implementation of 102 major projects in the "14th five-year plan"; (financial associated press) 2) ministry of housing and urban-rural development: focus on solving the urgent, difficult and anxious problems around the people, and implement high-quality urban renewal actions; ( financial associated press) 3) national bureau of statistics: my country's construction industry pmi was 50.7% in september, an increase of 0.1 percentage points from the previous month. (financial associated press)

industry perspective:recently, policy determination has been demonstrated, and policy benefits have been continuously released. first-tier cities such as beijing, shanghai, guangzhou, and shenzhen have significantly relaxed their real estate policies. the national development and reform commission will also introduce incremental policies at the state council information office press conference on the 8th. we believe that the current favorable policies are expected to continue, and the rise in hong kong stocks shows positive market sentiment. it is recommended to pay attention to construction state-owned enterprises with high dividends that have broken the net profit for a long time.

1. the construction progress is greatly affected by the availability of funds, natural conditions, etc., and delays may occur, which will affect revenue recognition; the construction progress of overseas projects is also affected by local politics and safety environment.

2. the continued downturn in the real estate market may have many adverse effects on construction companies. the impact of real estate on construction companies is mainly reflected in: 1) the current land market is sluggish, and local government land transfer revenue has declined significantly, which has adversely affected the source of infrastructure funds; 2) the real estate market continues to be sluggish, and commercial housing sales and construction starts have declined significantly. , affecting the new orders of housing construction companies, while the decline in completed area has affected the orders of decoration companies, and the business development of related construction sub-sector companies has been adversely affected; 3) thunderstorms among real estate companies have affected the receivables of real estate companies. , construction companies with inventories of real estate development projects bring impairment pressure.

3. the expansion of new energy business may not be as expected. some traditional construction companies have deployed in new fields such as new energy consulting, engineering, and operations. however, this field relies more on government resources and its own professional strength, and there may be risks of failure in expansion.