Tianfeng Securities·2025-05-05 05:11Investment Rating - The industry rating is "Outperform the Market" (maintained rating) [5] Core Viewpoints - The construction sector is under pressure, with Q1 2025 showing a revenue decline of 6% and a net profit drop of 8.4%. However, the steel structure segment achieved a positive revenue growth of 7.3% [2][15] - The recent fiscal policies are expected to accelerate the implementation of physical work volumes, particularly in the central and western regions, and in cyclical professional engineering sectors [1][2] - The demand for infrastructure investment is anticipated to improve, driven by the issuance of special bonds and increased government funding [2][35] Summary by Sections Fiscal Policy and Market Conditions - The construction sector faced a revenue decline of 4.1% and a net profit drop of 14.4% in 2024 due to the downturn in the real estate industry and tight local finances [2][13] - The first quarter of 2025 continued to show pressure, with a revenue decline of 6% and net profit down 8.4%, attributed to slower project commencement compared to the previous year [2][15] Operational Performance - The operational performance of the professional engineering sector remained relatively stable, with the chemical engineering segment showing a net profit growth of 7.4% in Q1 2025 [2][15] - Major state-owned enterprises like China Communications Construction and China State Construction reported significant increases in new orders, indicating a recovery in traditional infrastructure sectors [3][25] Investment Recommendations - Focus on cyclical opportunities in infrastructure, particularly in high-growth regions such as Sichuan, Zhejiang, Anhui, and Jiangsu, as well as major transportation projects [35][36] - Emphasize investments in emerging sectors such as AI and cleanroom technologies, with specific recommendations for companies involved in data centers and semiconductor manufacturing [37][38] - Highlight potential in significant hydropower projects and the deep-sea economy, suggesting investments in companies like China Power Construction and China Energy Engineering [38]