According to the Futubull Finance APP, Haitong Securities released research reports stating that industry pressure has already emerged, awaiting policy changes. The industry's business climate continues to be under pressure, with large construction central enterprises showing stable operations. Meanwhile, the State-owned Assets Supervision and Administration Commission and the China Securities Regulatory Commission are jointly promoting the inclusion of market capitalization in the evaluation system of central SOEs (State-Owned Enterprises), expecting valuation improvements for central construction SOEs.

The main points of Haitong Securities are as follows:

Liu Shijin: Suggesting to form an economic stimulus scale of no less than 10 trillion yuan in the next two years. On September 21, the 2024 Third Quarter Forum of the China Macro Forum (CMF) was held. Liu Shijin, former Deputy Director of the Development Research Center of the State Council, suggested during the forum to launch a package of stimulus measures combined with reforms for economic revitalization, driving the economy back to an expansionary growth track. Liu Shijin believes that it is necessary to implement the reform measures of urban-rural integration development outlined in the Third Plenum of the Twentieth Party Congress, with the fiscal policy taking the lead and closely coordinating with demand-side structural reforms, generating comprehensive effects of expanded consumption, stable growth, and risk prevention. Liu Shijin proposed to mainly raise funds by issuing ultra-long-term special national bonds, aiming to form an economic stimulus scale of no less than 10 trillion yuan in one to two years.

Industry pressure has already emerged, awaiting policy changes. In the first half of 2024, the revenue growth rate of the construction industry decreased by 10.06% to -3.58% year-on-year, with a single quarter revenue decline of -7.82% in the second quarter. In the first half of 2024, the construction industry generated a cash outflow of 511.628 billion yuan from operating activities, with a net outflow increase of 120.0%. We use the formula ((inventory + notes receivable and accounts receivable + other accounts receivable + advances + long-term receivables + contract assets + other non-current assets - notes payable and accounts payable - other payables - advances received -contract liabilities - other non-current liabilities) / revenue) as an indicator to reflect to a certain extent the corporate funding pressure (in simple terms, the percentage of funds that need to be advanced to achieve this scale of income). Overall, the average funding ratio of the eight major central construction enterprises in 2023 has reached its historical peak, rising by 1.57% from the 2014 high point of 19.03%.

The monthly issuance of special bonds increased month-on-month and year-on-year, with the on-site fund placement rate improving for four consecutive weeks. Regarding the issuance of special bonds: The amount of new special bonds issued by local governments this week (9/16-9/20) was 174.724 billion yuan, a 6.68% decrease from the previous week; the total amount of new special bonds issued this month (9/1-9/20) was 361.953 billion yuan, an increase of 29.54% compared to the same period in August and a 119.82% increase compared to the same period in 2023. As for the fund placement rate: As of September 17th, the on-site fund placement rate of construction sites increased by 0.21 percentage points to 62.52% compared to the previous week, marking the fourth consecutive week of improvement, and a 0.52 percentage point increase from the level at the end of August.

Market review: During this week (2024.09.16-2024.09.20), the construction index rose by 1.91%, while the SSE Composite Index increased by 1.21% during the same period. From the beginning of 2024 to date, the construction index has accumulated a decline of 16.48%, ranking 11th out of 29 industries. In the same period, the SSE Composite Index fell by 8.00%. Looking at different sectors, all sub-sectors rose this week. Among them, the building construction sector saw the largest increase, with a range of 2.66%, followed by the steel structure, infrastructure, and professional engineering sectors with ranges of 2.50%, 1.94%, and 1.78% respectively. Other sectors such as decoration, chemical engineering, international engineering, engineering consulting, petroleum engineering, and landscaping sectors had ranges of 1.30%, 1.26%, 1.11%, 1.04%, 0.83%, and 0.33%, respectively.

Risk warning: The policy of stable growth is below expectations, and the new energy projects may not be implemented as expected.