Investment Rating - The investment rating for the construction and decoration industry is "Positive" (maintained) [4] Core Views - Infrastructure investment is experiencing a short-term bottoming out, with cumulative year-on-year growth turning negative for the first time since 2004. In 2025, narrow infrastructure (excluding electricity) completed 18.08 trillion yuan, down 2.20% year-on-year, while broad infrastructure totaled 24.50 trillion yuan, down 1.48% year-on-year. December saw significant declines, with narrow and broad infrastructure down 12.22% and 15.95% year-on-year, respectively. Despite this, major strategic projects are expected to continue, and infrastructure investment is anticipated to stabilize and recover gradually [5][12][22]. Summary by Sections Infrastructure Investment - In 2025, narrow infrastructure investment completed 18.08 trillion yuan, down 2.20% year-on-year, while broad infrastructure totaled 24.50 trillion yuan, down 1.48% year-on-year. December saw a year-on-year decline of 12.22% for narrow infrastructure and 15.95% for broad infrastructure, with significant drops in water conservancy and public facilities management [5][12]. New Orders - New orders in 2025 showed a pattern of stability among central enterprises, with China State Construction, China Railway, China Electric Power, and China Energy achieving new orders of 4.15 trillion yuan, 2.75 trillion yuan, 1.33 trillion yuan, and 1.45 trillion yuan, respectively. Local state-owned enterprises exhibited more significant differentiation, with Shanghai Construction, Shaanxi Construction, and Pudong Construction seeing declines of 35%, 25%, and 23% year-on-year, while Sichuan Road and Bridge saw a substantial increase of 47% year-on-year [6][17]. Market Performance - The construction and decoration index rose by 1.88% during the week, with chemical engineering, steel structure, and international engineering leading the gains at 10.70%, 7.71%, and 4.49%, respectively. A total of 123 stocks in the construction sector rose, with the top five performers being Huawi Design (+51.92%), Zhite New Materials (+49.21%), and others [8][28]. Company Dynamics - Several companies reported significant changes in their financial performance for 2025. For instance, China Metallurgical Group expects a net profit decline of 76.28% to 80.73% due to ongoing losses in the real estate sector and substantial asset impairment provisions. In contrast, companies like Xinjiang Jiaojian anticipate a net profit increase of 50.14% to 125.22% [24][25].

Core Viewpoint - In 2025, China's infrastructure investment is projected to reach 24.5 trillion yuan, reflecting a 1.5% decrease from the previous year, with a narrow infrastructure growth rate of -2.2% [1] Group 1: Infrastructure Investment Trends - Key sectors such as pipeline transportation, warehousing, and internet services are expected to maintain a rapid growth rate in infrastructure investment, while sectors like ecological protection, water conservancy, road transportation, and public facilities are experiencing significant declines [1] - A series of investment-promoting policies implemented since the second half of 2025 are anticipated to lead to an acceleration in key engineering and sector-specific infrastructure investments in the first half of 2026, despite a lag in the physical work volume due to funding and project formation delays [1] Group 2: Investment Tools and Indices - The infrastructure ETF (159619) tracks the CSI Infrastructure Index (930608), which selects listed company securities involved in construction, engineering, and machinery manufacturing from the Shanghai and Shenzhen markets to reflect the overall performance of securities related to infrastructure construction [1]

Summary of Conference Call on Construction and Building Materials Industry Industry Overview - The construction and building materials industry is experiencing significant investment opportunities, particularly in the central and western regions of China, with a focus on Sichuan Province due to debt reduction and state-owned enterprise reforms [1][4] - Infrastructure investment growth is projected at approximately 4.5% for 2026, with a focus on regional and structural characteristics [5] Key Insights - **Special Bond Issuance**: There has been a notable acceleration in the issuance of special bonds, particularly in Q4 2025, with a total of 200 billion yuan issued by the end of October, followed by 460 billion and 190 billion in November and December respectively. However, these funds are expected to translate into physical investments primarily in Q1 2026 [2][3] - **Construction Orders**: The amount of construction orders has increased by 23% year-on-year, indicating a significant rise in physical workload for Q1 [2][3] - **Central Enterprises**: Major construction central enterprises like China State Construction and China State Construction International are expected to see substantial valuation recovery if they can clear receivables through debt reduction and reform [1][8] - **Overseas Orders**: Companies like China National Materials and Jinggong Steel Structure have shown remarkable growth in overseas orders, with Jinggong's overseas orders increasing by 90% year-on-year, reaching 7.2 billion yuan [2][10] Regional Focus - **Sichuan Province**: As a strategic hub, Sichuan is expected to benefit from policy incentives and has a stable demand for fixed asset investments. The province's infrastructure investment is projected to have significant potential due to its rising share of national transportation investment [6][7] Sector Recommendations - **Building Materials**: The building materials sector is currently in a phase of valuation recovery, with recommendations prioritizing consumer building materials, cement, glass, and fiberglass [11] - **Consumer Building Materials**: Within this category, the recommended order is waterproof materials, gypsum boards, pipes, and coatings [12] Market Dynamics - **Demand Trends**: Demand for various building materials is expected to decline from previous highs, particularly in waterproof and municipal pipeline sectors, while coatings and gypsum boards show resilience due to renovation activities [14] - **Infrastructure Impact**: The acceleration of special bond issuance and a strong start to 2026 are expected to support overall demand for building materials, particularly in renovation-related products [15] Supply and Pricing - **Waterproof Industry**: The waterproof sector has seen a significant reduction in small enterprises, with the top three companies controlling nearly 50% of the market. Price stability or slight increases are anticipated due to a shift in pricing strategies [16] - **Cement Sector**: Cement companies are currently valued at historical lows, with a mild recovery in production capacity utilization expected. Prices are projected to follow a trend of low-to-high throughout the year [17] - **Glass Sector**: The glass market remains weak, with demand linked to construction activity. Supply constraints due to production line adjustments may provide some support [18] - **Fiberglass Sector**: Fiberglass demand is less correlated with real estate, with price stability expected for standard products and slight increases for high-end products [19]

Core Viewpoint - In 2025, China's infrastructure investment is projected to reach 24.5 trillion yuan, representing a 1.5% decrease compared to the previous year, with a slowdown of 1.6 percentage points compared to the cumulative growth rate from January to November [1] Infrastructure Investment Summary - The narrow infrastructure growth rate for 2025 is recorded at -2.2%, which is a decline of 1.1 percentage points compared to the cumulative growth rate from January to November [1] - Key sectors such as pipeline transportation, warehousing, and internet services are maintaining a relatively fast growth rate in infrastructure investment, while sectors like ecological protection, water conservancy, road transport, and public facilities are experiencing significant declines [1] Policy Impact Summary - A series of investment-promoting policies have been implemented since the second half of 2025, but there is a lag in the realization of infrastructure investment from funding to project completion [1] - With the support of new policy financial tools, ultra-long-term special bonds, and newly issued special bonds, infrastructure investment in key projects and sectors is expected to accelerate in the first half of 2026 [1]

Report Industry Investment Rating - The short - term outlook for hot - rolled coils is "Oscillating with an upward bias", maintaining a bullish view [6] Core Viewpoints - Currently, the supply of hot - rolled coils is contracting, and the demand is resilient, resulting in an overall tight balance between supply and demand. Pre - holiday winter stockpiling is an important support for current demand. The social inventory is decreasing month - on - month, and the factory inventory pressure is controllable. Although the inventory is still high year - on - year, the overall inventory risk has marginally improved. The tight balance between supply and demand and inventory reduction support prices. In the future, attention should be paid to raw material costs and the strength of post - holiday demand recovery. Technically, the price has stood above the 5 - day and 30 - day moving averages, and it is expected to oscillate with an upward bias in the short term [6] Summary by Directory Market行情回顾 - **期货价格**: On Friday, the持仓 volume of the main hot - rolled coil futures contract increased by 33,977 lots, and the trading volume was 304,877 lots, showing an increase compared to the previous trading day. The intraday low was 3,283 yuan, and the high was 3,310 yuan, with an oscillating upward trend. It closed at 3,305 yuan/ton, up 17 yuan or 0.52%. It has stood above the 5 - day and 30 - day moving averages, and if it holds, the probability of short - and medium - term strengthening is relatively high [1] - **现货价格**: The price of hot - rolled coils in the mainstream Shanghai area was reported at 3,290 yuan/ton, up 10 yuan from the previous trading day [2] - **基差**: The basis between futures and spot was - 15 yuan, with futures slightly at a premium to the spot [3] Fundamental Data - **Supply**: As of January 22, the weekly output of hot - rolled coils decreased by 29,500 tons month - on - month to 3.0541 million tons, and decreased by 172,300 tons year - on - year. The output decline may be affected by factors such as maintenance arrangements and profit fluctuations, which supports prices [4] - **Demand**: As of January 22, the weekly apparent consumption decreased by 42,000 tons month - on - month to 3.0996 million tons, and increased by 73,900 tons year - on - year. Although the demand has slightly declined month - on - month, it has maintained growth year - on - year. Pre - holiday stockpiling supports demand, and the overall demand is resilient [4] - **Inventory**: As of January 22, the total inventory decreased by 45,500 tons month - on - month to 3.5778 million tons (social inventory decreased by 46,600 tons month - on - month, and factory inventory increased by 1,100 tons). It increased by 212,700 tons year - on - year (social inventory increased by 241,800 tons year - on - year, and factory inventory decreased by 29,100 tons year - on - year). The total inventory decreased month - on - month, and the inventory pressure has marginally eased. The year - on - year increase indicates that the inventory accumulation speed this year is slightly faster than last year, but the overall risk is controllable [4] - **Policy**: The new regulations on steel export license management will cause short - term export fluctuations, increase supply, and put pressure on prices. In the long term, it will promote industrial upgrading, structural optimization, and competitiveness improvement. The Central Economic Work Conference in December proposed a proactive fiscal policy and a moderately loose monetary policy, and listed the in - depth rectification of involution - style competition as a key task in 2026, which is beneficial to prices and industry profitability. Efforts are also being made to stabilize the real estate market and expand domestic demand [5] Market Driving Factor Analysis - **Bullish factors**: Decrease in supply - side output, expectation of winter stockpiling demand, export rush, policy support ("14th Five - Year Plan", infrastructure investment), and strong iron ore as a furnace charge [6] - **Bearish factors**: Unexpected resumption of production by steel mills in January, seasonal weakening of demand, insufficient manufacturing orders, and inventory accumulation suppressing prices [6]

Group 1 - The core viewpoint of the article highlights the recovery in the construction materials sector driven by increased infrastructure investment and the issuance of local special bonds, leading to a positive sentiment in the market [1] Group 2 - Since the beginning of 2026, the construction materials sector has shown signs of improvement, with the construction materials ETF (516750) rising over 3% during trading on January 20, 2026, and nearly 80% of the stocks in the sector experiencing gains [1] - Research institutions indicate that the construction materials sector benefits from both policy support and marginal demand improvement, with infrastructure investment providing support for traditional materials like cement and waterproofing materials [1] - The supply-side constraints in the industry remain, allowing for potential price and profit recovery, which has attracted increased attention from funds towards cyclical sectors amid low valuation [1] - The construction materials ETF (516750) covers various sub-sectors including cement, waterproofing, glass, and pipes, focusing on leading companies in the industry, providing investors with a convenient tool to capitalize on the recovery in the construction chain [1]

Summary of Key Points from the Conference Call Industry Overview - The real estate development investment in 2025 is projected to decrease, with a notable shift where cash inflow exceeds outflow for the first time, indicating market stabilization and reduced credit risk [1][2] - New construction area is expected to drop to 580 million square meters, while completion area is around 600 million square meters, suggesting the market is digesting historical inventory and entering a phase of reduced volume and price increases [1][4] - The outlook for 2026 indicates a policy shift towards high-quality development, moving away from excessive contraction in the real estate sector [1][5] Key Financial Metrics - In 2025, the real estate market's investment growth is projected at CNY 8.2 trillion, with sales growth at CNY 8.3 trillion, indicating that sales revenue surpasses investment, which is a positive sign for cash flow [2] - Fixed asset investment growth is expected to decline by 3.8% in 2025, with narrow infrastructure investment decreasing by 2.2%, reflecting weak performance in fixed asset and infrastructure investments [1][8] Market Dynamics - Current urban rental yields range from 1.5% to 2.2%, which, when adjusted for inflation, could reach approximately 3.5%, indicating a stable price expectation as inflation rises [1][6] - The period from late March to early April 2026 is anticipated to be a critical turning point for the real estate sector, transitioning from a rotational increase to a proactive increase [1][7] Sector-Specific Insights - The construction materials sector is performing relatively well despite the overall economic downturn, with cement production and sales down by 6.9% [3][13] - Companies like Oriental Yuhong, Henkel Group, and Sankeshu are highlighted for their growth potential, while Beixin Materials and Rabbit Baby are attractive due to low valuations and dividend returns [3][13] - The fiberglass industry is expected to maintain high demand until the fourth quarter of 2026, driven by increased penetration of specialty electronic fabrics [3][14] Challenges and Risks - The construction and manufacturing sectors are facing significant challenges, with real estate down 37% and manufacturing down 11% year-on-year in December, indicating a softening economic foundation [3][12] - Despite fiscal spending remaining positive, the allocation towards traditional infrastructure has decreased, leading to a marginalization of traditional construction projects [3][11] Investment Opportunities - The building materials sector presents several investment opportunities, particularly in consumer building materials, which are expected to provide stable returns [3][17] - Companies like China National Building Material and Xinyi Glass are recommended for their strong market positions and potential for growth in the fiberglass and electronic glass sectors [3][17][18] Conclusion - The real estate and construction sectors are undergoing significant changes, with a focus on high-quality development and stabilization of market dynamics. Investors are advised to remain cautious while exploring opportunities in resilient segments of the building materials industry.

作者 | 第一财经 陈益刊 去年基础设施建设投资（下称基建投资）增速罕见出现下滑。 1月19日，国家统计局公开数据，2025年全年全国固定资产投资（不含农户）约48.5万亿元，比上 年下降3.8%。分领域来看，基础设施投资（不含电力、热力、燃气及水生产和供应业）下降2.2%。 这是2014年以来国家统计局公布的基建投资增速中，首次出现增速下滑情形。 根据国家统计局数据，2014年基建投资增速同比增长约21.5%，此后几年基建投资增速均保持两位 数高增长，但2018年基建投资增速大幅降至3.8%，2020年疫情冲击下，基建投资增速进一步下 滑，2021年降至0.4%低点。2022年国家积极推进落实稳经济一揽子政策和接续措施，基建投资增 速反弹至9.4%，2023年和2024年基建投资增速逐步放缓，分别为5.9%和4.4%，基本保持平稳增 长。 不过2025年全年基建投资同比增速下滑至2.2%。从2025年全年的月度增速来看，增速呈现逐步放 缓态势。2025年一季度基建投资增速高达5.8%，上半年这一增速放缓至4.6%，前三季度这一增速 放缓至1.1%，而全年则出现下滑。为何如此？ 2026.01. 19 本文字 ...

Group 1 - The construction industry is expected to experience a simultaneous contraction in total volume and structural differentiation by early 2026, with infrastructure investment showing localized resilience supported by policy measures [1] - The fiscal policy for 2026 is set to be proactive, with the early issuance of special bonds already initiated in multiple regions, alongside the release of new policy financial tools to ensure sufficient funding for major projects [1] - Real estate and infrastructure demand are still in a bottoming phase, with many regions intensively starting major projects to expand domestic demand, while water conservancy, new infrastructure, overseas business, and the western region are highlighted as structural bright spots [1] Group 2 - The real estate market continues to decline, negatively impacting the construction business, with ongoing pressure on real estate transactions and a lack of market recovery [1] - High-frequency data indicates a mixed performance in the upstream building materials market, with weak supply and demand for cement, declining prices, increased rebar production but low steel prices, and a year-on-year decrease in the operating rate of asphalt facilities, all at historically low levels [1] - The infrastructure ETF (159619) tracks the CSI Infrastructure Index (930608), which selects listed company securities from the construction and engineering sectors, covering various sub-sectors such as infrastructure construction, specialized engineering, and housing construction to reflect the overall performance of related listed companies in the infrastructure engineering field [1]

Group 1 - The A-share market shows mixed performance with the Shanghai Composite Index down by 0.11%, while the Shenzhen Component Index and the ChiNext Index are up by 0.10% and 0.13% respectively [1] - The Infrastructure ETF, Huaxia, increased by 2.79%, reaching a new high of 1.177 yuan, with a turnover rate of 4.77% during the session [1] - Among constituent stocks, China Electric Power Construction rose by 10.07%, China Energy Construction by 7.56%, and China Communications Construction by 4.68% [1] Group 2 - On January 13 and 14, China Electric Power Construction announced the signing of significant contracts, including a seawater desalination project in Iraq, a multifunctional rehabilitation center in Kazakhstan, and a hydropower station project in Laos, with a total contract value of approximately 32.8 billion yuan [1] - The latest price-to-earnings ratio (PE-TTM) for the China Securities Infrastructure Index is 9.98, indicating that valuations are relatively low and suitable for bargain hunting [1]