Guotou Securities·2025-11-24 02:32Investment Rating - The industry investment rating is "Leading the Market - A" [5] Core Insights - The construction sector is experiencing a decline of 6.11% this week, with traditional construction SOEs down by 3.63%. Year-to-date, traditional construction SOEs have seen a price drop of 10.70% due to slowing infrastructure investment and declining real estate investment. Currently, the valuation of the construction sector is low, with a TTM price-to-earnings ratio of 9.0 for the SW construction decoration sector and 5.4 for traditional construction SOEs. Despite revenue growth being under pressure, key operational indicators are improving, and several companies are increasing their dividend payouts. The fiscal policy remains positive, and the effects of debt reduction may gradually manifest by 2026, indicating a robust defensive attribute for the sector. Investment opportunities in undervalued traditional construction SOEs are recommended for Q4. Additionally, the western region's construction and cleanroom sectors maintain high demand, driving growth for leading companies [1][15][11]. Summary by Sections Industry Dynamics - Low-valued infrastructure SOEs exhibit strong defensive characteristics, while overseas and cleanroom engineering sectors continue to show high prosperity. The construction sector's performance has been negatively impacted by market adjustments, with traditional construction SOEs facing operational pressures [1][15]. Market Performance - The construction industry has seen a 6.11% decline this week, underperforming compared to major indices. The international engineering sector has shown relatively better performance with a smaller decline of 1.31% [21][22]. Company Announcements - Major contracts have been awarded, including China Railway Construction winning projects worth 40.52 billion yuan. China Power Construction reported new contracts totaling 957.98 billion yuan for the first ten months, with a year-on-year increase of 0.95% [31][30]. Key Focus Stocks - Recommended stocks include China Railway Construction, China State Construction, and China Communications Construction, which are expected to benefit from improved operational indicators and fiscal policy support. The focus is also on companies in the cleanroom sector and those with significant overseas orders [10][12][29].