Railway Investment and Financing Opens Up: Foundation Engineering Industry Set to Benefit Again
2013-09-02
1008
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Boosted by the news that railway investment and financing has opened up, high-speed rail concept stocks have surged sharply for several consecutive days, once again confirming the saying, "When the train sounds, gold comes in by the ten thousand taels." At the same time, swept up in this favorable tide are related industries such as infrastructure engineering, machinery and rolling stock, and information and electronic equipment. A closer look reveals that, in terms of segments, the high-speed rail feast will once again benefit five major industries.
I. Foundation Engineering Construction
According to the plan of the former Ministry of Railways at the beginning of the year, fixed asset investment across the railway system in 2013 was set at 650 billion yuan, including 520 billion yuan in infrastructure investment. However, due to funding problems, progress on many planned railway projects slowed or was even suspended. According to previous announcements by China Railway Corporation, infrastructure investment in the first half of the year completed only 35.96% of the annual plan. Undoubtedly, the opening up of railway investment and financing will bring about an expected inflow of funds, which will revive the railway infrastructure projects that slowed in the first half of the year.
II. Machinery and Rolling Stock
Of particular note is that bidding for high-speed trains, which has been stalled for more than two years, is expected to restart this year. According to the former Ministry of Railways' plan at the beginning of the year, this year it planned to procure 1,000 locomotives, 290 EMU trainsets, and 40,000 freight cars. On this basis, China Merchants Securities estimated the procurement amount at about 107 billion yuan. Industry insiders told reporters that with the construction of intercity railways over the past two years, intercity trains are becoming another important growth point for machinery and rolling stock manufacturing.
III. Information and Electronic Equipment Industry
With investment and financing opening up, both infrastructure and rolling stock involve large amounts of information and electronic equipment. Major listed companies include Huadong Numerical Control, Shenyang Machine Tool, Qinchuan Development, Dongli Transmission, Jinyi Industrial, Shidai Technology, Times New Material, Huihuang Technology, and Yuanwanggu, among others, with enormous room for development.
IV. Construction Supporting Industries
It is worth emphasizing that the beneficiary industries also include steel, cement, electric power, building materials, and other industries that provide supporting materials and supplies for construction machinery and bridge and tunnel construction.
V. Railway Operations and Logistics Industry
Analyses by several securities firms point out that companies such as Guangshen Railway, Guoheng Railway, Tielong Logistics, Shentong Metro, and Zhongchu Holdings have huge potential for business value-added within the large logistics system. In particular, for some leading enterprises with large-scale railway freight capacity, expectations are becoming clearer for them to rely on transportation hubs in the future to enhance their business reach.
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