Jinwu Financial News | Infrastructure stocks are collectively under pressure, with China Railway (00390) down 3.54%, TIMES ELECTRIC (03898) down 3.35%, CHINA COMM CONS (01800) down 3.1%, Metallurgical Corporation of China (01618) down 3.05%, China Railway Signal & Communication Corporation (03969) down 2.88%, and CRRC Corporation (01766) down 2.79%.
Guosen Securities stated that downstream demand in the construction industry is declining, leading to a decrease in new orders signed by construction enterprises and a slowing growth in output value. Leading state-owned enterprises are seizing market share due to lower financing costs, while the revenue performance of private enterprises continues to decline. Due to the worsening collection situation for projects, accounts receivable in various forms continue to accumulate on the balance sheet, resulting in construction enterprises 'passively expanding their balance sheets'. As both the collections and payments from downstream clients are poor and policies require clearing private enterprise accounts, the current state-owned general contractors face significant pressure on both the collection and payment sides, leading to a notable increase in cash outflow pressure.
The bank pointed out that Real Estate Investment continues to decline. Due to sluggish sales, the new construction starts in real estate have dropped significantly, leading to a continued decrease in construction area. It is expected that new investment in 2025 will still be weak, with a year-on-year decrease in real estate construction investment of -7.7%. Due to issues such as local debt risk control and the lack of projects for special bonds, Infrastructure investment continues to weaken, with new construction investment amounts dropping significantly and the number of ongoing projects decreasing significantly. A forecast for 2025 indicates a -3.3% change in narrow Infrastructure investment. Manufacturing investment is relatively more resilient, as the industrial inventory cycle is gradually shifting from passive destocking to proactive restocking. With the recovery of downstream demand, the need for industrial expansion will drive growth in manufacturing investment.
