Construction/Housing Fixtures - Industry Views: Construction Margin-driven Earnings Growth Story Intact, Watch Low-P/E General Contractor/Electrical/HVAC Engineering Names

研报英文原文证据摘录

Construction/Housing Fixtures - Industry Views: Construction Margin-driven Earnings Growth Story Intact, Watch Low-P/E General Contractor/Electrical/HVAC Engineering Names

FoundationM

Conclusion (Construction Attractive; Housing Fixtures In-Line)

Construction: Our industry view is Attractive: Our order of preference within the industry is general contractors > electrical engineering > HVAC > telecom engineering >

special civil engineering

• Business conditions are good for general and sub-contractors. Abundant projects for factories, data centers, redevelopments etc support firm demand. General contractors and electrical/HVAC

engineering firms are building up jobs out to 2028-29. Supply capacity shortages are keeping S/D tight, and rising margins at order receipt remain in prospect.

• General contractors: As business conditions remain good and S/D tight, the story of earnings growth driven by rising construction margins is intact. Construction as a whole looks undervalued, but we focus on

names with relatively low adj. P/E.

• Subcontractors: S/D remains tight for electrical & HVAC installation works, and while focusing on earnings expansion due to rising margins we home in on names looking relatively undervalued on P/E.

Housing Fixtures: Our industry view is In-Line

• There have been concerns about housing market slumps overseas as a result of factors such as interest rates holding at high levels and economic recessions. These concerns have not been eliminated, and it is

still difficult for investors to pick stocks using a macro top-down approach.

• However, sluggish business conditions have been priced in, and we believe that stocks which appear undervalued and have potential for future profit growth will attract attention.

Individual stocks