Ye Tan, commentator of NBD
China Railway is fighting hard, which way? The state-owned monopoly enterprises and the market valuation are hard, first A and then H, the first share. The listing of China Railway reflects a series of policy orientations.
China Railway The IPO was questioned reasonably: the welfare expense was written back to 1.174 billion yuan of management expense, and the operating profit was increased in disguised form to meet the listing requirements. Even based on the net profit of 580 million yuan in the first half of the year, the price earnings ratio of China Railway is still as high as 84.16 times.
There is no doubt that this is not a good company, but a company with clear monopoly dividends and future expectations. Don't forget that several major state-owned banks are also on the verge of bankruptcy before capital injection and listing. The doubts about China Railway are positive in terms of market logic, but short-sighted in terms of strategy. According to the pure market logic, many large state-owned enterprises in China are not worth investing, not only China Railway. However, those investors, especially strategic investors, have gained a lot of profits, which may be the reason why China Railway sells at a high price. To put it bluntly, what we sell is monopoly and expectation, and what we gamble is China's economy Long-term development prospects.
Expectations come from the following facts: although one foot of China's economy has stepped into the capital era, the other still stays in the era of railway and highway construction, combining the current United States with the United States in the mid-19th century. The Railway Age, America capital market Railway stocks are also rampant, and investors may lose or earn heavily. Regardless of the loss or profit, it reflects the economic hot spot of an era. Different from the United States, when all the railway construction lords started together, China Railway was a monopoly enterprise in China's railway construction industry. At the same time, it also set foot in roads, bridges, tunnels and other municipal projects, becoming the only highlight of the era of railway construction. At present, the large-scale construction of the railway network, followed by the electrification of the railway network, has risen from the current 45% to 100%. The concept of one after another is overwhelming.
The report of China Railway reflects the extreme tension of its capital chain. According to China's Medium and Long term Railway Network Planning, by 2020, the total capital demand for national railway construction will be up to 2 trillion yuan, with an average annual investment of about 130 billion yuan. At present, the annual investment scale of national railway is only about 50 billion yuan, which means there is a huge capital gap. For this reason, the Ministry of Railways also envisaged getting rid of the existing financing mode that almost relies on national investment, attracting foreign capital and private capital to participate in railway construction, and finally failed because of monopoly and refusal to delegate power.
At the critical moment when the National Economic Work Conference will implement sound fiscal policies and tight monetary policies next year, market funds will be tightened, and stock market bulls will be suppressed to balance the rapid rise of the exchange rate, the listing of China Railway with a high P/E ratio undoubtedly declares that the government will open its eyes to large state-owned enterprises that are related to national infrastructure and solve the bottleneck of economic development. The monopoly position of China Railway will be strengthened. Considering that the financing amount of China Railway this time is far from enough for the construction, the government's financial input, issuance of corporate bonds and other support will be increased.
More importantly, China Railway is the first order of A before H, which directly determines the success or failure of the A-share pricing battle. As is customary, the government will devote all its resources to such a decisive battle for success. It is really too heavy for a company with high debt ratio like China Railway to shoulder the mission of regaining the pricing right of A-shares. Fortunately, there are a steady stream of support groups behind it. The land and hotels owned by the Ministry of Railways are the source of water, which is also a huge profit in the capital era. The reason why China Railway highlights its real estate business in a high profile is to show its trump card to the market.
From the market reflection, China Railway will achieve good results in the mainland and in Hong Kong two days later. It was issued domestically at the upper limit of 4.8 yuan, and the actual raised capital was 22.44 billion yuan; 3.326 billion H-shares were sold in the Hong Kong market at a ceiling price of HK $5.78, raising HK $19.224 billion. The public offering in the Hong Kong market was over 300 times oversubscribed.
At the time of the issuance of China Railway, the A-share market recovered, and institutional investors came to the market to build positions and play the "shoulder the tripod" program. Institutions ignored the problems of China Railway intentionally and abandoned PetroChina, which is obviously more profitable, to join China Railway, apparently not because of their lack of professional quality.
Sina statement: The content of this article is purely the author's personal view, only for investors' reference, and does not constitute investment advice. Investors operate accordingly at their own risk.
