After seeing some signs of improvement in the construction industry in China and Hebei Province, we estimate that the worst of Hebei construction is over. The accelerated development of Xiongan New area is also expected to bring more projects to the construction of Hebei. Therefore, we are more optimistic about the prospects of Hebei construction, so we raised the investment rating of Hebei construction from strong sell to neutral.
After four consecutive months of decline, fixed asset investment in Hebei Province increased by 0.9% in June 2020 compared with the same period last year. Although fixed asset investment in the construction industry still recorded a negative growth of 1.1 per cent, it was much smaller than the-16.2 per cent recorded in February this year.
Real estate investment in Hebei Province also returned to growth momentum, falling by 17.3%, 5.8%, 4.8% and 0.4% respectively from February, March, April and May this year, to a year-on-year increase of 0.6% in June. Among them, residential commercial real estate investment recorded a negative growth of 13.0% in February, March and April, respectively, followed by an increase of 1.1% in May and 3.8% in June. It seems that the construction industry in Hebei Province has rebounded at the bottom, so we are optimistic about the growth of new construction projects in Hebei Province.
After shrinking 6.8 per cent in the first quarter of this year, China's GDP grew by 3.2 per cent in the second quarter. We believe that the government will continue to take more fiscal measures, including expanding infrastructure investment, to stimulate the economy. In the first five months of this year, new renminbi loans in China rose 45.3 per cent year-on-year to about 17.3 trillion yuan. Of this total, new infrastructure-related loans increased by $4.1 trillion, or 68.3%, year-on-year. To RMB 10.1 trillion. With the expansion of infrastructure investment by the Government, it can be expected that infrastructure projects will increase substantially, which will benefit the construction of Hebei Province.
According to the National Development and Reform Commission, two special project funds of about 2.5 billion yuan and 1.1 billion yuan were invested in the construction and development of 19 infrastructure projects in Xiongan New area in May and July this year, respectively. According to media reports, the number of infrastructure projects under construction in Xiongan this year is expected to exceed 100. The construction of major infrastructure projects such as the high-speed railway linking Xiongan New area and Beijing Daxing International Airport, and the intercity railway and highway connecting Xiongan New area and the capital have been completed in stages, and more projects are expected to start construction in Xiongan. As the main contractor in Baoding, where Xiongan New area is located, Hebei Construction is expected to get more projects with the acceleration of Xiongan development.
After the release of the interim results, we will readjust the profit forecast, investment rating and target price of Hebei structure.