CSCEC(SH:601668) Changjiang Securities·2025-11-17 23:30Investment Rating - The report maintains a "Positive" investment rating for the construction and engineering sector [10] Core Insights - The construction sector exhibits characteristics such as low valuation, low institutional holdings, large market capitalization, and stable outlook for quality targets. The market is experiencing a high-low switch, with four key directions for investment in the construction industry: 1) Strong short-term performance in Q3 reports 2) High dividend yield providing a stronger holding safety net 3) Strong long-term growth potential 4) Low absolute valuation of large-cap weighted targets [2][8] Summary by Relevant Sections Market Overview - The construction sector is one of the two indices in the Yangtze River Level 3 industry index that are trading below book value. Institutional holdings in the construction sector have historically been low, which may reflect a weak outlook for the industry and low attention from investors. However, some key players, particularly state-owned enterprises, have played significant roles in stabilizing growth and the economy, leading to a more favorable future outlook for certain construction companies [8] Dividend Yield Analysis - High dividend yield stocks in the construction sector include: Sichuan Road & Bridge (5.9%), Jianghe Group (5.8%), Jinggong Steel Structure (5.6%), Anhui Construction (5.5%), China National Materials (5.3%), China State Construction (5.0%), and Hong Kong-listed China State Construction International (6.6%) [8] Performance Metrics - As of the end of Q3, the insurance sector's holdings in A-shares were primarily in high-dividend, stable bank stocks, indicating that high-dividend construction stocks are likely to benefit. The top ten A-share stocks held by insurance institutions include Minsheng Bank, Shanghai Pudong Development Bank, Agricultural Bank of China, and China United Network Communications [7] Economic Indicators - In October 2025, the construction PMI was reported at 49.1%, a year-on-year decrease of 1.3%. The new orders index was at 45.9%, showing a year-on-year increase of 2.4%. The input price index was at 49.6%, down 5.6% year-on-year, while the sales price index was at 48.4%, down 3.7% year-on-year [53][57] Investment Trends - The report highlights a trend of "high-low switching" in the equity market, indicating a divergence in investor sentiment towards high-valuation sectors. The construction sector is seen as having higher investment value due to its low valuation and potential for price volatility and safety margins [8]