Twelfth Five-Year Plan Outlines Investment Opportunities in Three Major Industries of Construction Machinery

Editor's Note: The main contents of the "12th Five-Year Plan" will be people's livelihood as the main line, with economic restructuring as the goal, and then achieve economic development goals of sustainable economic development. Among them, the expansion of domestic demand has become one of the key words in planning, while domestic demand mainly includes consumption and investment. This version has launched a series of consumer articles on Tuesday, so today will mainly analyze the impact of the “Twelfth Five-Year Plan” on the beneficiary industries from the perspective of investment and tap into the investment opportunities.

From the perspective of investment, during the “12th Five-Year Plan” period, regional planning in the central and western regions and affordable housing in cities and towns will be launched. It will determine that equipment manufacturing, railway infrastructure, medical reform, and new energy vehicles are still in the growth cycle. Its cyclical nature of over-strengthening has led to historically low valuations, so there is room for price appreciation in these industries due to valuation recovery and further growth in the later period.

Equipment manufacturing "Made in China" upgrade urgently

At present, due to the lack of core technologies, OEM production is still the universal survival mode of “Made in China”. In order to achieve by 2020, China will become the national competitiveness strategic target of a comprehensive, powerful, key first-rate, and overall superior, advanced country.” The 12th Five-Year Plan will focus on high-end equipment manufacturing.

Large-scale equipment manufacturing industry is the high-end field of manufacturing industry. High-tech and advanced management models in manufacturing industry are basically embodied in equipment manufacturing. The largest profit space in manufacturing industry is also equipment manufacturing. Equipment manufacturing represents the direction of the entire manufacturing industry and determines the level of the entire manufacturing industry. Including heavy machinery, ships, aircraft, power generation equipment, large boilers, metallurgical machinery, mining machinery, special equipment and other large equipment manufacturers.

It is understood that in the satellite industry of high-end equipment manufacturing, Beidou II and Beidou third-generation satellite networks will become one of the four major navigation systems that can cover the world; when it comes to ground-related equipment, the listed companies are Beidou Xingtong and Guoteng Electronics. The company’s China Satellite, which is expected to be favored by the company, will be expected to be favored by the company.

The structural adjustment of grid investment has deepened. Judging from the “Twelfth Five-Year Plan” announced by the State Grid and the tendering of the smart grid, the focus of power grid construction will focus on the development of UHV and smart grids. The U.S. "12th Five-Year Plan" announced in August proposed to complete the "three horizontal, three vertical and one ring network" structure layout in 2015. This plan includes a total of approximately 9,000 km of new AC lines, 29 new substations, approximately 23,000 km of DC lines, and 21 new converter stations. It is estimated that the investment in the “12th Five-Year” UHV project will reach 310 billion yuan. In the next 10 years, a huge industrial chain driven by the smart grid is slowly starting to unfold.

In addition, some analysts believe that if the growth rate of social fixed asset investment during the “12th Five-Year Plan” period is controlled at around 20%, in 2015, China’s market demand for construction machinery will reach 900 billion yuan. In 2009, the scale of domestic fixed asset investment reached 22.5 trillion yuan, an increase of 5.8 times from less than 3.3 trillion yuan in 2000. During the period, the market size of the construction machinery industry increased by 5.46 times. The construction of urbanization, investment in highways, wind power and nuclear power will be the main driving force for the rapid growth of the construction machinery industry in the next five to ten years.

Railway Infrastructure Railway Construction Enters High Speed ​​Rail Times

According to the data recently released by the Ministry of Railways, in the first three quarters of this year, the country's fixed assets investment in railways increased by 26.6% year-on-year to 491.246 billion yuan, of which infrastructure investment was 429.86 billion yuan, up 26.3% year-on-year.

According to the currently announced construction projects, the mileage of China's railways will reach 110,000 kilometers in 2012, and the railway mileage target in the current medium and long-term railway planning is only 120,000 kilometers. Judging from the 12th Five-Year Plan currently submitted to the National Development and Reform Commission, the enthusiasm for building railways everywhere is extremely high, and the possibility of railway construction exceeding the mid- to long-term plans is extremely high.

At present, the railway infrastructure is at the peak of investment. At the same time, under the background of the coordinated development of the regional economy in the country, the upward adjustment of the domestic rail network's long-term construction scale is a general trend.

According to the securities, with the increase of railway mileage in the 12th Five-Year Plan, the definitive increase in the industry's profit growth will bring the valuation of the industry back to a dynamic P/E ratio of 20 to 30 times. Therefore, the industry stock will also have 100% -200% more room for growth.

It is particularly noteworthy that after entering the 21st century, China’s railway construction has entered the high-speed rail era. In 2008, China built the first high-speed railway between Beijing and Tianjin that has a speed of more than 300 kilometers per hour. In 2009, China had the world’s The Wuhan-Guangzhou Passenger Dedicated Line for high-speed railways with the highest built-in mileage and longest operating speed. As of mid-2010, China's high-speed rail operating mileage reached 6,920 kilometers, ranking first in the world.

In 2012, China will build an 8-hour high-speed railway transportation hub centered on Beijing. According to the newly-adjusted medium and long-term railway network plan, by 2012, China’s railway operating mileage will increase from the current 80,000 km to 110,000 km, including high-speed railways. The passenger dedicated line will reach 18,000 kilometers.

Securities said that "double iron" has gained a lot, and China's high-speed rail has entered the global market. In recent years, Chinese railway construction companies represented by China Railway Group and China Railway Construction Corporation have received large orders in overseas railway markets.

Marine engineering has become a new growth point for the national economy

According to media reports, the biggest highlight of the "Twelfth Five-Year Plan" is that related companies will build 50 million tons of production capacity in China's offshore shelf and continental slope during the "12th Five-Year Plan" period, and the total investment in marine engineering equipment will exceed 2,500. 100 million yuan. In response, many marine engineering ship companies will also receive a share of the orders brought by the plan.

China has a coastline of 18,000 kilometers on the mainland. There are more than 6,500 islands with an area of ​​more than 500 square meters. There are a wide variety of marine resources. There are abundant resources such as marine life, oil and gas, solid minerals, renewable energy, and coastal tourism. The potential for development is huge. China’s marine development is ushering in unprecedented opportunities. The Party Central Committee and the State Council attach great importance to it. The positive response of the government departments in the coastal areas and the implementation of the eastern development strategy lead to the inevitable development of marine economic science. Under the guidance of the "Twelfth Five-Year Plan", through the adjustment, optimization, upgrading, and transformation of the marine industry, especially the development of strategic emerging marine industries, the contribution rate of the marine economy to the national economy will inevitably further increase, and the relevant offshore industry will be listed. The company will also face major development opportunities.

The marine economy has been making continuous contributions to the national economy and it has been continuously improving. In 2009, the total value of marine production in the country exceeded the threshold of 3 trillion yuan, reaching 3.1964 trillion yuan. The total value of marine production accounted for nearly one-tenth of the GDP. According to this trend, the future will become a potential pillar of the national economy. The development potential of the ocean has long been concerned by all countries in the world, and the rapid development of China’s marine economy needs to continue its deep understanding of the ocean.

The industries involved in marine engineering equipment industry include offshore oil and gas development, marine platform manufacturing, auxiliary equipment manufacturing, oil and gas exploration services, and equipment design general contracting related listed companies.

According to industry analysts, in the A-share market, listed companies involved in offshore engineering include: China Shipbuilding, China Heavy Industry, and CIMC Group for offshore oil and gas development; ZPMC and GSI International; It is a leader in offshore oil helicopter services; in oil and gas exploration services, COSL has strong capabilities; there are also many companies involved in equipment design general contractors, such as Shanghai Jiahao, Jiangling shares, Jereh shares; Shenkai shares provide comprehensive logging Instrument, oil and gas tree and oil analyzer; Baode shares electronic automation products for drilling and mining equipment; Anshan Iron and Steel Co., Ltd. provides steel for marine equipment; Juliite supplies stainless steel welded pipe for oil and gas transmission; Lifting equipment sling spreaders has become an indispensable tool, and Zenith Technology can provide submarine optical cables.

China’s marine economy has maintained a strong momentum of development in the first decade of the new century. Data show that the average annual growth rate of marine production is 16.12%, far higher than the GDP growth rate over the same period. In the second decade of the 21st century, China's marine development will enter a new stage in the country's new strategic support, and it is expected to become a new growth point for the national economy.