1.5 billion yuan invested in the construction of a prefabricated industrial park, Longyuan construction of new and old infrastructure kinetic energy

On the evening of August 12, Longyuan Construction (600491) issued an announcement stating that in order to promote the development of steel structure prefabricated business, the wholly-owned subsidiary Longyuan Mingzhu intends to sign an “investment agreement” with the Xuancheng Economic and Technological Development Zone Management Committee. The company intends to invest in the local prefabricated construction technology industrial park project. The project will be constructed in two phases with a total investment of about 1.5 billion yuan.

In July of this year, policies related to prefabricated buildings were successively implemented. The "Action Plan for the Creation of Green Buildings" and "Guiding Opinions on Promoting the Coordinated Development of Intelligent Construction and Building Industrialization" all proposed to vigorously develop prefabricated buildings. As a new kinetic energy concept in the construction industry, the prefabricated market has risen. Last week, the Shenwan construction sector rose 2.41%, and the prefabricated industry chain stocks led the construction sector.

Prefabricated building stands on the cusp of policy

On July 28 this year, 13 ministries including the Ministry of Housing and Urban-Rural Development jointly issued the "Guiding Opinions on Promoting the Coordinated Development of Intelligent Construction and Building Industrialization." The document pointed out that it is necessary to vigorously develop prefabricated buildings, accelerate the creation of an Internet platform for the construction industry, and promote the application of intelligent production lines for steel structure components and intelligent production lines for precast concrete components.

This is not the first time that a national department has issued an incentive policy for prefabricated buildings this year. Since 2016, the state and various local governments have successively introduced policies to promote the development of prefabricated buildings. While giving land support and tax incentives to prefabricated construction enterprises, they also set requirements for the proportion of prefabricated buildings in newly-built buildings.

According to data from the Ministry of Housing and Urban-Rural Development, the newly started construction area of prefabricated buildings nationwide increased from 114 million square meters in 2016 to 418 million square meters in 2019. They accounted for the proportion of newly-built construction area increased from 4.90% to 13.40%, the compound growth rate of about 55% in the past five years.

In 2019, the Ministry of Housing and Urban-Rural Development successively approved seven provinces, including Zhejiang, Shandong, Sichuan, Hunan, Jiangxi, Henan, and Qinghai, to carry out pilot projects of steel structure prefabricated residential construction. The current policy is obviously inclined to steel structure.

In June 2020, the Ministry of Housing and Urban-Rural Development issued “Opinions on Vigorously Developing Steel Structure Buildings (Draft for Solicitation of Comments)”. The "Opinions" pointed out that focusing on super-large, extra-large and large cities, vigorously promote steel structure public buildings, and various provinces and cities have issued relevant supporting policies to provide strong support.