Soochow Securities·2025-06-22 11:02Investment Rating - The report maintains an "Overweight" rating for the construction and decoration sector, specifically recommending an increase in investment in the water conservancy and specialized engineering segments [1]. Core Insights - The construction and decoration sector experienced a decline of 2.24% during the week of June 16-20, 2025, while the Shanghai Composite Index and the Wind All A Index fell by 0.45% and 1.07%, respectively, indicating an underperformance of 1.79% and 1.17% [1]. - The National Development and Reform Commission (NDRC) is promoting over 3,200 projects to private capital, with a total investment exceeding 10.14 trillion yuan, aimed at enhancing private investment participation in major national projects [2][20]. - The second China-Central Asia Summit resulted in the signing of 12 cooperation documents, which are expected to boost infrastructure demand in Central Asia and Xinjiang, China [2][23]. Summary by Sections Industry Policy and News Commentary - The NDRC is accelerating the introduction of a long-term mechanism for private enterprises to participate in major national projects, which is expected to stimulate effective investment and benefit engineering and related material demand [2][20]. - Economic data for May shows a stable growth trend, with infrastructure investment increasing by 5.6% year-on-year, although the growth rate has slowed [3][18]. - The construction PMI showed a slight recovery, indicating an acceleration in construction activities and improved project expectations [4][13]. Market Performance Review - The construction and decoration sector's performance has been under pressure, with significant declines in real estate investment and sales, reflecting ongoing challenges in the sector [3][18]. - Retail sales of construction and decoration materials showed a positive growth of 3.0% year-on-year, indicating some resilience in consumer demand [3][18]. Recommendations - The report suggests focusing on construction companies with stable performance and low valuations, such as China Communications Construction Company, China Power Construction Company, and China Railway Group, as they are expected to benefit from policy support and infrastructure investment recovery [4][14]. - For international projects, companies like China National Materials Group and Shanghai Port Group are recommended due to their potential to benefit from ongoing infrastructure cooperation under the Belt and Road Initiative [8][14].