Tianfeng Securities·2025-06-24 13:11Group 1 - The construction industry is experiencing a downturn due to declining demand, with infrastructure investment growth slowing down to 5.8% in April 2024, which is still at a low level [1][10][19] - The construction sector is primarily driven by infrastructure investment and real estate development investment, leading to negative year-on-year changes in new starts, construction, and completion areas [1][10][19] - The total output value of the construction industry is expected to decrease, with a 1.65% decline in completed output value in 2024, marking the second negative growth in a decade [13][19] Group 2 - The construction industry has a low entry barrier, resulting in a large number of companies, but only a few are involved in bond issuance, primarily focusing on state-owned enterprises [2][22] - The credit quality of construction companies can be analyzed through six dimensions: external support, operational performance, asset scale and quality, capital structure and debt repayment ability, profitability, and cash flow [2][22][23] - The majority of bond issuers in the construction sector are state-owned enterprises, with 57 central state-owned enterprises and 51 local state-owned enterprises identified [9][22][32] Group 3 - As of June 18, 2025, the total bond scale in the construction industry is 1,032.6 billion, with infrastructure being the largest sub-sector, accounting for 71% of the total [3][22] - The majority of bond issuers are state-owned enterprises, with 98% of the issuers being central state-owned enterprises and 84% rated AAA [3][22] - The bond maturity pressure is relatively high in the next two years, especially in 2025, indicating a need for careful management of debt repayment [3][22] Group 4 - Investment strategies for construction bonds can be considered from three dimensions: parent-subsidiary yield spread, variety yield spread, and guarantee arbitrage [4][22] - The parent-subsidiary yield spread strategy suggests investing in bonds of subsidiaries with relatively stable credit quality but higher yields compared to their parent companies [4][22] - The variety yield spread strategy recommends selecting perpetual bonds from higher-rated issuers, which generally offer higher yields than non-perpetual bonds [4][22]