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Thematic (Sector/Industry)

China Industrials / Thematic (Sector/Industry)

Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK)

The latest gathering of China’s National People’s Congress has produced some reassuring news for the domestic infrastructure sector. In our view, we should see a similar level of fixed-asset investment, or FAI, growth (8%-9%) in 2017, and the public-private partnership, or PPP, project financing method will play an increasingly instrumental role in infrastructure development. The National Development and Reform Commission, the nation’s top economic development planning agency, is targeting about 8% year-on-year FAI growth, with a heavy emphasis on transportation infrastructure development in both inland regions and prosperous coastal provinces. The implied growth target in 2017 is in line with our assumption and reinforces our view that infrastructure firms with heavy PPP exposure (<a href="https://www.smartkarma.com/entities/265" target="_blank" data-smartkarma-citation="entities:265:1">China Communications Construction Co Ltd (1800 HK)</a>, or CCCC, and <a href="https://www.smartkarma.com/entities/265" target="_blank" data-smartkarma-citation="entities:265:1">China Communications Construction Co Ltd (1800 HK)</a>, or CSCI) are among the top beneficiaries in the latest transportation driven spending push. Our fair value estimates for no-moat CCCC and narrow-moat CSCI are unchanged at HKD 11.5 per share and HKD 14 per share, respectively, and we will revisit our valuations upon the release of annual results in late March.Analyst: John Hu

The latest gathering of China’s National People’s Congress has produced some reassuring news for the domestic infrastructure sector. In our view, we should see a similar level of fixed-asset investment, or FAI, growth (8%-9%) in 2017, and the public-private partnership, or PPP, project financing method will play an increasingly instrumental role in infrastructure development. The National Development and Reform Commission, the nation’s top economic development planning agency, is targeting about 8% year-on-year FAI growth, with a heavy emphasis on transportation infrastructure development in both inland regions and prosperous coastal provinces. The implied growth target in 2017 is in line with our assumption and reinforces our view that infrastructure firms with heavy PPP exposure (China Communications Construction Co Ltd (1800 HK), or CCCC, and China Communications Construction Co Ltd (1800 HK), or CSCI) are among the top beneficiaries in the latest transportation driven spending push. Our fair value estimates for no-moat CCCC and narrow-moat CSCI are unchanged at HKD 11.5 per share and HKD 14 per share, respectively, and we will revisit our valuations upon the release of annual results in late March.Analyst: John Hu

Shanghai Electric Group Company (601727 CH)

China Railway Construction Corp (1186 HK)

China Communications Construction (1800 HK)

Xinjiang Goldwind Science & Technology (002202 CH)

XCMG Construction Machinery A (000425 CH)

China Railway Signal & Communication (3969 HK)

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

Cosco Shipping Energy Transportation Co. Ltd. (H)

Shanghai Tunnel Engineering Co, Ltd. (600820 CH)

Cssc Offshore & Marine Engg Group (317 HK)

Zhongshan Broad Ocean Motor Co., (002249 CH)

North Navigation Control Technlgy (600435 CH)

Tian Di Science & Technology Co., (600582 CH)

Shanghai International Airport (600009 CH)

Beijing Watertek Information T (300324 CH)

Metallurgical Corporation Of China Ltd (601618 CH)

Shanghai Electric Group Company (2727 HK)

Xinjiang Goldwind Science & Technology (2208 HK)

Beijing Capital International Airport (BCIA) (694 HK)

Beijing Capital International Airport (BCIA)

Dongfang Electric Corporation (600875 CH)

Bluefocus Communication Group Co, Ltd. (300058 CH)

Jiangxi Special Electric Motor A (002176 CH)

China Avionics Systems Co., Ltd. (600372 CH)

China International Marine Cntnrs Gp (2039 HK)

Beihai Yinhe Industry Investment (000806 CH)

Metallurgical Corporation of China Ltd (1618 HK)

Sinochem International Corporation A (600500 CH)

Suzhou Gold Mantis Construction Decoration (002081 CH)

Suzhou Gold Mantis Construction Decoration

Shanghai International Port Group (600018 CH)

AviChina Industry & Technology H (2357 HK)

Shanghai Construction Group Co, Ltd. (600170 CH)

Beijing Originwater Technology Co,Ltd. (300070 CH)

Shenzhen Inovance Technology Co., (300124 CH)

China National Chemical Engineering Company A (601117 CH)

China National Chemical Engineering Company A

Xinjiang Machinery Research Inst (300159 CH)

China International Marine Containers A (000039 CH)

AECC Aero-Engine Control Co. Ltd. A (000738 CH)

Yingkou Port Liability Co., Ltd A (600317 CH)

The Latest Government FAI Target Warrants Stable Growth Prospects for Infrastructure Sector