The “Chinese prefix” stocks of the big infrastructure have collectively soared, one of the most interesting tracks?


On February 20th, the major infrastructure central enterprise stocks made a collective effort, and China State Construction, China Communications Construction, China Railway Group, China Chemical, China Railway Construction, China Metallurgical Corporation, China Energy Construction, etc. are all rising.

work hard! The “Chinese prefix” stocks of the big infrastructure have collectively soared, one of the most interesting tracks?

According to a report by China Business News, on January 17, data from the National Bureau of Statistics showed that infrastructure investment in 2022 will increase by 9.4%, which is a farewell to double-digit growth in infrastructure investment since 2018, and the growth rate has continued to decline in recent years. Under the situation, it stopped falling and rebounded for the first time, and it was significantly higher than that in 2021 (0.4%). It became a bright spot in China’s economic data last year and also promoted the economy in the fourth quarter of last year to be better than expected.

In the capital market, “undervaluation” may be the key word that has been lingering on these central enterprises with “Chinese initials”.

There are many reasons for the underestimation.

First of all, central enterprises rely very little on the capital market in financing. Compared with private enterprises, large central enterprises are often more likely to obtain support from banks and other channels, and their financing costs are lower. Therefore, they often only issue stocks as a supplement. It is rare to actively maintain stock prices through buybacks and other means.

Secondly, central enterprises are mainly industrial enterprises, which are an important part and pillar of my country’s real economy. The industrial operation of enterprises rather than scale growth is the primary pursuit of central enterprises, and the market value assessment of central enterprises is very weak. In terms of data indicators, the nature of the enterprise also determines that the managers of central enterprises are more concerned about the operating data such as revenue and profit.

Third, most central enterprises are in mature industries such as energy, finance, and infrastructure, and have a good margin of safety. Large fluctuations in market value are not conducive to the maintenance of corporate image. Therefore, these central enterprises lack spontaneous market value management goals and prefer stable stock prices.

However, with the continuous deepening of the reform of state-owned assets, central enterprises have finally been able to flex their muscles in the capital market.

The first is that “market value management” has been re-emphasized.

In March 2021, the State-owned Assets Supervision and Administration Commission issued the “Notice”, proposing that central enterprises should comprehensively sort out the communication with investors of listed companies, hold performance briefings in a timely manner, and help investors better understand the situation of listed companies. The chairman and general manager of the company participated in person.”

This notice is considered to be an important statement of SASAC’s concern about the market value indicators of central enterprises.

The significant increase in the number of repurchases shows that state-owned enterprises are paying more and more attention to market value management.

According to the relevant research of China Securities Investment, the number of state-owned enterprise share repurchase plans will increase steadily from 2019 to 2021, and the repurchase of state-owned enterprises will reach a climax in 2021.

If we turn our attention to 2007, the big market that the central enterprises came out of that round was caused by the two policies in the field of capital market, the reorganization of central enterprises and the overall listing of central enterprises.

At that time, as soon as this national-level big move was made, the market gave enthusiastic feedback. China Shipbuilding Minpin rose 106% in nine trading days after its resumption, and the shares of Fengfan, which involved the overall listing of China Shipbuilding Industry Corporation, doubled within the year. Sinochem International, Baiyun Airport, Dianguang Media, Jingwei Textile Machinery, Zhongcheng Corporation, CNNC Technology, China Technology Trading and other central-owned listed companies all performed strongly, and the central enterprises ushered in a big outbreak within a few months.

In-depth docking with the capital market and building a leading listed company through reorganization and integration is another main line of state-owned enterprise reform.

From “North Vehicle” to “COSCO and China Shipping”, from “Two Cores” to “Shenhua Guodian”, from “China Rare Earth” to “COFCO Grain Storage”, the integration of central enterprises has formed a “horizontal merger” strategic reorganization, “vertical integration” “In three ways, including upstream and downstream integration of the industrial chain and professional integration, the path of reform and reorganization has become increasingly clear.

As of May 2022, there have been 28 major restructuring incidents implemented by listed companies of central enterprises, a year-on-year increase of 267%. The industry is spread across various fields such as machinery, electrical appliances, mining, and food.

The State-owned Assets Supervision and Administration Commission issued the “Work Plan for Improving the Quality of Listed Companies Holding the Holdings of Central Enterprises”, and “flagship leading listed companies” and “professional leading listed companies” have become new goals for the development of listed central enterprises. And expressions such as “continue to incubate and promote more high-quality assets to connect with multi-level capital markets”, “promote intrinsic value and market value to go hand in hand”, “innovate boldly and act proactively” also let us know more about the performance of central enterprises in the capital market expectations.

With the continuous deepening of state-owned assets reform, top-level plans have been introduced one after another, and state-owned enterprise reform concept stocks have become attractive investment targets. Among them, the “Chinese prefix” is particularly eye-catching. It is already the focus of the current market, and its future development is immeasurable.

Listed state-owned enterprises are an important backbone and backbone of the national economy. According to the data disclosed at the meeting of the State-owned Assets Supervision and Administration Commission in May 2022, listed central enterprises contribute about 65% of operating income and 80% of total profits. important part of the market.

The “Chinese prefix” stocks of the big infrastructure have collectively soared, one of the most interesting tracks?

First of all, central enterprises with excellent revenue profitability have obvious advantages in procyclical sector rotation.

Large-scale central enterprises with good fundamentals in the fields of military industry, infrastructure, manufacturing, and energy have taken advantage of the pro-cyclicality, and in the process of plate rotation, they have achieved a counter-trend rise in stock prices with the advantage of undervalued prices for many years.

Secondly, the real business of central enterprises can closely follow the strategic deployment and arrangement at the macro level of the country along the main line of high-certainty policies.

Compared with private enterprises, the operating activities and investment layout of central enterprises directly serve the national strategy, and there are usually less major temporary changes in policy and supervision. On the one hand, these enterprises usually occupy an absolute dominant position in important fields; on the other hand, their development direction is highly related to the national strategy and enjoys favorable policies.

For example, the State-owned Assets Supervision and Administration Commission clearly stated that central enterprises should implement the “14th Five-Year Plan” with high quality, and made clear guidance on the development direction of logistics platforms, manufacturing upgrades, digital transformation, emission reduction and carbon reduction, and central enterprises can be the first Captured the signal from the policy guidance for a while.

With the upgrading of the financing efficiency of central enterprises, the jump in the return on investment of shareholders and the acceleration of national development, these central enterprises are completing the synchronization of entity operation and capital operation. We have every reason to believe that under the main line of reform, the great era of A-share central enterprises has come.