Small property house breaks the project machinery to meet the opportunity

First, the opportunities and risks under the main line

Our recent pattern is that the current market's concerns about the stagflation market are all bearish. The real estate regulation stalemate is brewing and breaking, or it will reverse cautious expectations. In the medium term, we are still optimistic about high growth and high inflation.

Today we have observed an important fact: "Shijiazhuang, Hebei Province has recently promulgated the "Opinions on Accelerating the Construction of Safe and Secure Housing Projects." It has adopted an iron fist and has taken the lead in the country in promulgating residential houses that will forcibly confiscate illegal construction as an affordable housing. New initiatives."

We believe that this is a breakthrough in the use of small property rights housing reforms to promote real estate regulation and control. It also represents an important breakthrough in land transfer policies and land fiscal policy reforms. China’s urbanization is accelerating, optimistic about the benefit of the construction machinery industry, and at the same time, Export trading companies.

Second, why do we favor the construction machinery middle line investment opportunities (opportunities)

1. The acceleration of urbanization in China will further stimulate the growth of fixed asset investment

With the advancement of the reform of the small property house, we believe that this will imply that the stalemate of the real estate regulation that we are concerned about is brewing and breaking. The state will promote the dual-track housing system through this reform and realize a harmonious society. On the one hand, it will also represent a harmonious society. Land circulation, breakthroughs in local government land finance reforms, and support for China's economic growth behind the strong driving force - urbanization will accelerate, which will further intensify the increase in fixed-asset investment, which will help China's construction machinery industry development.

2. The valuation of the current construction machinery industry is very low, which is mainly suppressed by pessimistic expectations. As the policy breaks down, there will be obvious midline opportunities in the future.

Although the individual stocks of construction machinery have risen to some extent in the past year, the driving force of this increase is that the fundamentals of the industry and the company have continued to improve. With the recent decline in the market, it has begun to show some decline. The current valuation is approximately 12 times in 2011 and about 10 times in 2012. This is obviously inconsistent with the status of important beneficiary industries in China's urbanization process. We believe that the increase in fixed asset investment is mainly due to the suppression of domestic real estate regulation. With the gradual elimination of these repressive factors, we believe that there will be a clear midline opportunity in the future.

3. From the perspective of China's economic transformation, construction machinery will also be one of the important topics in the future.

We believe that construction machinery is not a simple industrial manufacturing industry. It has a relatively high technological content and relatively high barriers to entry. There is a need for upgrading the technology itself. From the perspective of China’s economic transformation, especially the strengthening of high-end equipment manufacturing, this industry is also It will be one of the important investment themes in the future.

Third, why do we look at aerial small export trading enterprises (risk)

Recently, we observed that the vast majority of SMEs in the eastern coastal areas are facing the dual pressures of rising costs and appreciation of the renminbi. They are in an embarrassing situation of “not producing for death, producing for death”. If the appreciation of the current exchange rate continues, the rise in the prices of raw materials and labor cannot be eased, and this year will usher in the closure of the coastal small and medium-sized manufacturing enterprises. This will be a sign of the end of China's low-end manufacturing industry. It will continue to see the performance of small-scale export companies in the air.