Three year action plan for railway market reform and speed up

On January 6, the Beijing Shanghai high speed railway, known as the "first share of China's high speed railway", officially opened its subscription, with an issue price of 4.88 yuan / share, a total IPO of 30.674 billion yuan, and an issue price earnings ratio of 23.39 times, breaking the "red line" of 23 times the IPO price earnings ratio of A-share main board. This is only part of the acceleration of market-oriented reform of China National Railway Group Co., Ltd. (hereinafter referred to as "China Railway Group"). The reporter of "economic reference" learned from the annual working conference of China Railway Group held recently that in 2020, a three-year reform action plan for China railway enterprises will be formulated, and the timetable, roadmap and major measures for deepening railway reform will be made clear. Tieke rail company, China Railway Special Products Co., Ltd., Jinying Heavy Industry Co., Ltd. and other enterprises will speed up their listing, while promoting the reform of mixed ownership, and attracting social capital to participate in railway construction.

Focusing on the "complementary board", the railway investment of 800 billion yuan in 2020 is an important driving point for the stable growth of infrastructure construction and the promotion of domestic demand, and plays an important role in the national strategy and regional economic development. According to the data of China Railway Group, in 2019, the fixed assets investment of national railway will be 802.9 billion yuan, including 751.1 billion yuan of national railway. Since 2014, the national railway investment has been kept at a high level of more than 800 billion yuan per year for six consecutive years. It is worth noting that 8489 kilometers of new railway lines will be put into operation in 2019, including 5474 kilometers of high-speed rail, far exceeding the target of 3200 kilometers at the beginning of the year. By the end of 2019, the national railway business mileage has reached over 139000 kilometers, including 35000 kilometers of high-speed rail. According to the plan of the Ministry of transport, the fixed assets investment of railway will still reach 800 billion yuan in 2020.

"We will fully complete the railway investment tasks assigned by the state, advance railway construction in a scientific and orderly manner, and ensure that more than 4000 kilometers of new lines are put into operation, including 2000 kilometers of high-speed rail." Lu Dongfu, chairman and Secretary of the Party group of China Railway Group, promised at the meeting. The construction of Sichuan Tibet railway is one of the major events. The project is a key project of the 13th five year plan of the state. It is also another major artery from the Qinghai Tibet Plateau to the mainland after the Qinghai Tibet railway. The total investment is about 250 billion yuan. It is planned to be completed in 2026. According to the deployment of the working meeting, in 2020, it is necessary to carefully deepen the feasibility study report and relevant cooperation, optimize the construction organization plan of the early commencement section, orderly promote the preliminary design and construction drawing design, coordinate with relevant units and local governments to accelerate the construction of supporting facilities, and comprehensively implement the conditions for commencement according to law.

Further promote the implementation plan of Sichuan Tibet railway major scientific and technological research, strengthen the construction of national Sichuan Tibet Railway Technology Innovation Center, prepare special technical standards and management standards of Sichuan Tibet railway, and promote new breakthroughs in major scientific and technological research of Sichuan Tibet railway. Lu Dongfu requires that key projects be implemented with high quality and efficiency. In accordance with the order of "open, under construction and start", we will do our best to ensure the completion of annual investment tasks and physical workload, and ensure that a number of key projects are opened and operated in accordance with the law. Plan the scale and project arrangement of construction in progress and new construction, focus on the implementation of the trunk line projects serving the national strategy, as well as the existing trunk line channel reinforcement, public to rail transit and transportation urgent needs and other complementary projects, so as to improve the investment efficiency and the overall function of the road network. Li Jia team of Huachuang Securities believes that the new high-speed rail production line will still exceed the target in 2020. It is predicted that the new high-speed rail lines will reach 5837 km, 4831 km and 5081 km respectively from 2020 to 2022.

According to the conservative assumption of 0.8 vehicle / km distribution density, 1577 EMUs will be added in the next three years, with an average of 526 units per year. 2020 will be a year when the demand for railway passenger transport, freight equipment, urban rail equipment and maintenance will rise together. At present, there is still a huge demand for railway construction in China. The past mode of debt raising has become unsustainable, which brings a lot of cash pressure. "At present, China Railway Group is at a critical moment to deepen the implementation of corporate reform and accelerate the promotion of joint-stock reform." Yang Chuantang, Secretary of the Party group of the Ministry of communications, said at the annual working conference of the state railway group that it is necessary to speed up the deepening of the reform of the joint stock system of the state railway, and constantly stimulate the endogenous power and operational vitality of the state railway. In response, Lu Dongfu said that in 2020, it is necessary to continue to promote the reform of high-quality assets to be listed and the refinancing of listed enterprises. We will ensure that the stock reform and listing work of Beijing Shanghai high speed railway, China Railway special cargo, Golden Eagle heavy industry, rail science and Technology Co., Ltd. and other enterprises achieve substantive results, and study and explore the stock reform and listing work of regional railway companies, design group companies and other key enterprises.

We will make full use of existing listed companies, promote asset acquisition and restructuring, and revitalize existing assets. It is understood that the Beijing Shanghai high-speed railway, with a total length of 1318km, was put into operation on June 30, 2011, running through seven provinces and cities including Beijing, Tianjin, Hebei, Shandong, Anhui, Jiangsu and Shanghai. As the most profitable high-speed rail line in China, the operating revenue from 2016 to 2018 was 26.258 billion yuan, 29.555 billion yuan and 31.158 billion yuan respectively, and the net profit attributable to the parent was 7.903 billion yuan, 9.053 billion yuan and 10.248 billion yuan respectively. It is estimated that the revenue in 2019 will be 31.5-33 billion yuan, an increase of 1.10% - 5.91% year on year, and the net profit in 2019 will be 11-12 billion yuan, an increase of 7.34% - 17.10% year on year. From the application for listing materials on October 22, 2019 to the meeting on November 14, 2019, the Beijing Shanghai high-speed railway only took 23 days, setting a new IPO issuance and examination record. According to the announcement, the IPO of Beijing Shanghai high speed railway is planned to issue no more than 6.286 billion shares, accounting for no more than 12.80% of the total share capital after the issuance.

The total amount of capital raised is expected to reach 30.674 billion yuan, and the total share capital of the company after the issuance is 49.106 billion shares. After the issuance, the market value of Beijing Shanghai high speed railway (issue price) is 239.6 billion yuan, ranking about 35 in the current A-share market (calculated by the closing price of A-share on January 3, 2020). "Pricing, cost, capacity and Reinvestment will be the four core variables that will affect the economic returns of the Beijing Shanghai high speed railway in the future." Guotai Junan research report pointed out. Qu Yongzhong, an analyst at Northeast Securities, also believes that the capacity of Beijing Shanghai high-speed railway will still have 10% growth space in the future. The pricing of high-speed railway passenger transport has independent rights. The raised funds are intended to purchase Beijing Fuzhou Anhui company. Short-term profits are affected and long-term performance is better. The head of relevant departments of China Railway Group said that Beijing Shanghai high speed railway company has a stable growth, and will inject blue chips into China's stock market after listing, which is conducive to optimizing resource allocation through the capital market, realizing capital expansion and efficient development of the main railway transport industry, and improving economic and social benefits; it is conducive to the establishment of market-oriented operation mechanism for China railway enterprises to maintain and increase the value of state-owned assets Industry demonstration effect.

The next national railway enterprise closest to the listing target should be Tieke rail company, whose main business is the R & D, production and sales of high-speed rail track engineering products with high-speed rail fasteners as the core. On November 25, 2019, the Shanghai stock exchange accepted the company's application for listing on the science and technology innovation board. China Railway Special Products Co., Ltd. also started the guidance work of listing in September 2019. China Railway special cargo Co., Ltd. is one of the three major professional transportation companies directly under the State Railway Group, mainly engaged in the railway transportation of commercial vehicles, large goods and refrigerated goods. Financial data shows that in 2018, the company's net profit was 576 million yuan. In addition, regional railway companies, design group companies and other key enterprises are also the main force in the next share reform and listing. Industry insiders believe that with reference to the case of Beijing Shanghai high speed railway, some passenger line construction and operation companies with better profitability are more likely to be put into the capital market first. In 2020, the railway will attract social capital and push forward the mixed reform by formulating the three year action reform plan.

Recently, the opinions on building a better development environment to support the reform and development of private enterprises put forward that in key industries and fields such as electric power, telecommunications, railway, oil and natural gas, competitive businesses should be liberalized and market competition mechanism should be further introduced; market access should be greatly relaxed in infrastructure, social affairs, financial services and other fields. Lu Dongfu said that this year, efforts will be made to expand equity investment in railway construction projects and effectively control debt risk. We will promote classified and layered construction of railways, and strengthen and standardize the management of non holding projects, EPC project general contracting, unit price contracting and other work. Give full play to the advantages of professional technology management of Railway Construction Management Co., Ltd., and actively expand the market-oriented business in the construction field. Deepen the practice of Station City integration investment and financing reform, and attract social capital to participate in railway construction. It is understood that in the past 2019, China Railway Group has continued to deepen the reform of railway investment and financing system, and xiong'an high speed railway, Haoji railway and other projects have attracted social investment of 11.7 billion yuan.

The capital of local governments and enterprises in railway infrastructure investment reached 209.5 billion yuan, an increase of 31.3 percentage points over 2016. Promote EPC projects such as Hangzhou Shaoxing Taiwan Railway and Yantong railway, and take important steps in market-oriented reform of railway construction. In addition to the construction level, in 2020, China Railway Group will also promote the industrial structure adjustment and layout optimization of its enterprises, and promote the reform of mixed ownership. At the same time, open up new growth points of railway operation and development. We will promote the implementation of a number of comprehensive land development projects. We will strengthen cooperation in production and research of railway advantageous projects, promote the industrialization of scientific and technological achievements, and achieve operational benefits. Make good use of the platform of guotie finance leasing company to deepen the reform of investment and financing of railway equipment. Improve the service platform of China Railway Jixun company and expand the industrial chain of railway passenger service.

Give full play to the professional advantages of Railway Bureau Group Company and expand the operation and maintenance market of local railways and non holding joint-venture railways. Integrate the big data resources of the whole industrial chain of the railway and fully tap the market value of the big data resources of the railway. "Mixed capital" is only the first step, and the key is to change the mechanism. In 2019, China Railway Group will accelerate the joint-stock transformation of the company, complete the reform and reorganization of the organs after the restructuring, and simplify 16.7%, 23.9% and 14.7% of the departments, internal institutions and staffing respectively. Lu Dongfu revealed that in 2020, a three-year reform action plan for national railway enterprises will be formulated to clarify the timetable, roadmap and major measures to deepen railway reform. At the same time, optimize and improve the operation mechanism of China Railway Corporation, revise and improve the business performance assessment methods, and accelerate the research and establishment of the list of management items of China Railway Corporation to Railway Bureau Corporation.

In addition, we will further strengthen three system reforms, including the implementation of the tenure system for leaders, the comprehensive implementation of the post appointment system for skilled personnel, the exploration and establishment of a market-based mechanism for selecting and employing personnel, the optimization of the wage decision mechanism of Railway Bureau Group Company, and the expansion of the pilot range of the market-based wage decision mechanism. Liu Xingguo, researcher of Research Department of China Enterprise Confederation, thinks that whether it is the reform of mixed ownership or IPO, the common significance lies in the following: first, introducing strategic investors and other new shareholders to exchange equity for capital, effectively reducing the asset liability ratio while increasing the supply of development capital and enhancing the power of development; second, forcing enterprises to improve corporate governance with major changes in shareholder structure Therefore, we should speed up the construction of modern state-owned enterprise governance system, improve management efficiency, and achieve efficiency growth.