Shenwan Hongyuan Securities·2025-07-13 04:45Investment Rating - The report rates the construction and decoration industry as "Overweight" [2][8] Core Viewpoints - The overall investment growth rate is weak, with infrastructure investment providing relative stability amidst pressures in manufacturing and real estate. Infrastructure investment (excluding electricity) grew by 5.6% year-on-year from January to May 2025, while total infrastructure investment increased by 10.4% [2] - The report predicts that corporate profits will face pressure in the first half of 2025 due to slowing fixed asset investment growth and a focus on project quality. The expected net profit growth rates for key companies are categorized into various ranges, with some companies projected to see declines [2][3] - The report suggests that low valuations of state-owned enterprises in the construction sector may recover due to ongoing economic stimulus policies and management's market value management methods. The current PE and PB ratios for the construction industry are at 11.2X and 0.76X, respectively, indicating a bottom position [2] - Investment recommendations include state-owned enterprises such as China Chemical, China Railway, and China Railway Construction, as well as private companies like Zhi Te New Materials and Shenzhen Ruijie [2] Summary by Relevant Sections Profit Growth Predictions - Companies with a net profit growth rate below -10%: China Railway, China Railway Construction, China Metallurgical Group, China Power Construction, Shanghai Construction, Honglu Steel Structure, Southeast Network Framework [3] - Companies with a net profit growth rate between -10% and 0%: China Communications Construction, Sichuan Road and Bridge [3] - Companies with a net profit growth rate between 0% and 10%: China Energy Engineering, China Steel International, Anhui Construction, Donghua Technology [3] - Companies with a net profit growth rate between 10% and 20%: China Chemical [3] - Companies with a net profit growth rate above 20%: Zhi Te New Materials, Shenzhen Ruijie [3] Valuation Table - The report includes a valuation table for key companies in the construction industry, detailing their stock prices, EPS, PE ratios, and projected net profit growth rates for 2024A, 2025E, and 2026E [3]