Introduction to this report:
China Construction's current dividend ratio is 5.03%, PB0.53 times, and 2024PE3.9 times the historical bottom. New signings in the first half of 2024 exceeded expectations by 10%, including a 35% increase in infrastructure and a 105% increase in overseas signings. Zhonghai Real Estate Equity ranked 1st in sales.
Key points of investment:
According to the National Bureau of Statistics, activity in the real estate market has increased recently. Second-hand housing prices in Beijing and Shanghai rose 0.2% and 0.5% month-on-month respectively in June. (1) According to the National Bureau of Statistics, various departments in various regions have actively adjusted and optimized real estate policies, and market activity has increased. In the first half of the year, the sales area and sales of newly built commercial housing across the country decreased by 19.0% and 25.0%, respectively. The decline was 1.3 and 2.9 percentage points narrower than in January-May. (2) According to data from the National Bureau of Statistics, in June, second-hand residential sales prices in first-tier cities fell 0.4% month-on-month, and the decline was 0.8 percentage points narrower than the previous month. Among them, Beijing and Shanghai rose for the first time in 2024, rising 0.2% and 0.5%, respectively. The year-on-year decline was 9.0%, and the decline was 0.3 percentage points narrower than the previous month.
(3) Mysteel's transaction area of newly built commercial residential buildings in Beijing, Shanghai, Guangzhou and Shenzhen in June all hit new monthly highs, increasing by 21%, 66%, 48%, and 38%, respectively. The volume of sales in Guangzhou and Shenzhen surpassed the same period in 2023.
Real estate sales in the Chinese construction market rose 11% in June for the first time in a year, and Zhonghai Real Estate ranked first in equity sales in June. (1) China Construction's January-June real estate contract sales of 191.5 billion yuan decreased 20% year on year, and the contract sales area of 6.55 millionm2 decreased 33% year on year. Among them, real estate contract sales of 55.6 billion yuan in June increased 11% year on year, and contract sales area of 16.9 billion yuan decreased 6.6% year on year. (2) China's construction land reserve of 84.54 millionm2 at the end of the January-June period decreased by 5.2% year on year, and newly purchased land storage of 3.7 millionm2 increased 12% year on year.
(3) According to China Index data, of equity sales in the first half of 2024, China Construction Yipin ranked 1st with a 17% year-on-year decrease of 139.4 billion yuan, China Construction Yipin ranked 16th with a 22% increase of 22.7 billion yuan, and China Construction Dongfu ranked 18th with a 30% drop of 30%; China Construction Yipin's land acquisition amount of 12 billion yuan also dropped 68% to rank 7th. China Construction Yipin's 21.3 billion yuan also ranked 2nd with an increase of 287%. Ninth.
China Construction signed a new 2.5 trillion yuan increase of 10% in the first 6 months, with infrastructure of 749.1 billion yuan increasing 35%. (1) From January to June 2024, a total of 2479.7 billion yuan was signed, with the same increase of 10%. Of these, the construction industry increased 14% with 2,288.2 billion yuan, housing construction increased 6%, accounting for 67% of the construction industry, and 749.1 billion yuan of infrastructure increased 35% to 33%. In June 2024, the new signing of 669.1 billion yuan increased by 5%. (2) From January to June 2024, new domestic contracts of 2.2 trillion yuan increased by 11%, while new overseas signings of 123.1 billion yuan increased by 105%, accounting for 5%.
In June 2024, the number of new domestic signatures of 588 billion yuan increased by 4%, and the number of new overseas signings of 25.5 billion yuan increased by 27%. (3) Judging from physical volume indicators, the construction area of housing construction increased by 1.1% from January to June, 0.14 billion square meters of new housing construction area increased by 4.2%, and completed housing construction area of 0.08 billion m2 increased by 17.2%.
Maintaining the highest global credit rating in the industry, the current dividend rate of 5.03%, PB0.53 times, and 2024PE is at a historical bottom of 3.9 times. (1) Maintain the forecast for 2024-2026 EPS1.40/1.48/1.55 yuan, an increase of 7%/6%/5%, and maintain the target price of 7.76 yuan, corresponding to 5.5 times PE in 2024. (2) China Construction's dividend rate of 5.03%, PB0.53 times the 10-year historical quartile of 4%, 2024PE 3.9 times the 10-year historical quartile of 14%. (3) It is one of China's longest professional development, the earliest market-based operation, the highest degree of integration, and the largest investment and construction group in the world. (4) It is a representative and leader of central enterprises implementing the national “Belt and Road” initiative, and the organizer and leader of the integrated service value chain for overseas investment, construction and operation. Maintain the industry's highest global credit rating. (5) The 2024 plan is to achieve a 4.1% increase in the amount of new contracts signed by more than 4.5 trillion yuan, and a 5.1% increase in operating income of more than 2.38 trillion yuan. The target for new contracts has been completed by 55% in the first half of the year.
Risk warning: real estate policy risk, inventory impairment risk, investment project impairment risk, etc.