Tianfeng Securities·2025-07-27 04:43Investment Rating - The industry rating is maintained as "Outperform" [5] Core Viewpoints - The construction sector has seen a significant increase of 7.1% this week, outperforming the Shanghai and Shenzhen 300 index by 5.9 percentage points, driven by infrastructure projects and the rise in specialized engineering and civil explosives sectors [1][29] - The report emphasizes the ongoing trend of "anti-involution" in the industry, suggesting investment opportunities in construction blue chips and steel structure sectors, particularly in the central and western regions of China [1][2][36] Summary by Sections Investment Logic - Four angles to capture investment opportunities in the construction sector: 1. Price Elasticity: Companies involved in resource development or trade, such as Northern International and China Railway, are recommended due to expected price increases in resources [2][15] 2. Supply-Demand Optimization: Focus on construction blue chips as the anti-involution movement may alleviate price pressures in the industry, with recommendations for quality local state-owned enterprises like Sichuan Road and Bridge [2][17] 3. Transformation and Upgrading: Companies with stronger technological attributes are expected to benefit from structural high prosperity in technology-driven infrastructure demands, with recommendations for Tunnel Corporation and China State Construction International [2][21] 4. Downstream Profit Improvement: If anti-involution policies improve profitability in steel and cement industries, there will be a rebound in capital expenditure needs, recommending companies like China National Materials and China Steel International [2][23] Market Performance - The report notes a slight decline in the operating rates of petroleum asphalt and cement shipment rates, with the cement shipment rate at 43.07%, down by 2.8 percentage points [3][26] - Central state-owned enterprises showed a positive trend in order data for Q2, with notable growth in orders for companies like China Railway and China Nuclear Engineering [3][26] Key Recommendations - The report suggests focusing on high-growth local state-owned enterprises in regions with strong infrastructure investment, such as Sichuan, Zhejiang, and Anhui, as well as major central state-owned enterprises like China Communications Construction and China Railway [36][37] - Emphasis is placed on the potential of nuclear power and emerging business directions within the construction sector, highlighting the high prosperity of nuclear power investments [38]