中国铁路深度系列#6：多式联运能帮助建立最高效的运输系统

1、Global Research17 January 2020China IndustrialsChinaChina Railway In-depth Series #6: Can multimodal help to build the most efficient transport system?Advanced infrastructure + multimodal = a highly efficient transport systemWe take our proprietary railway analysis one step further from highway-to-r

2、ailway (H2R) conversion to multimodal transportation, which is leveraging an advanced railway network. Chinas logistics performance is close to the OECD level, according to the World Bank. With a 10% CAGR in Chinas multimodal transport in 2021-25E and its share to reach 4.5% by 2025E (from 3% in 201

3、8), we foresee further improvements in Chinas transport efficiency. Recent case studies of multimodal transportation in the US and Europe provided interesting read-throughs for China, in our view. We expect railway contractors, container manufacturers, special equipment makers and logistics companie

4、s to be key direct beneficiaries of multimodal transport growth.What is driving the strong multimodal transport growth?The high multimodal transport penetration in the US and Europe provides useful models for China to follow. We think multimodal transport is one key element supporting Chinas ambitio

5、us Building A Leading Transport Nation policy. We believe key factors driving multimodal transport growth are: 1) development of multimodal integrators; 2) expansion of the freight railway network (especially the so-called last miles to the final destinations), and multimodal terminals and facilitie

6、s; 3) technological improvements (eg, longer and faster freight trains); and 4) policy support.Identifying industries that could be positively or negatively affectedWe consider railway construction a direct beneficiary of multimodal transport growth, helping to build out infrastructure and providing

7、 equipment to facilitate the application of multimodal transport. Logistics companies could benefit from reduced transportation costs and by acting as integrators for business expansion. Container manufacturers and special equipment makers could also be positively affected, driven by increasing dema

8、nd generated by higher container multimodal penetration. However, we anticipate toll road operators to be adversely affected, as a considerable amount of highway-transported freight could be gradually transferred to railways and waterways.Our most preferred names under the themeWe upgrade Tielong Lo

9、gistics from Neutral to Buy as we think it is a key beneficiary of rising multimodal penetration. We also like the leading container manufacturer, China International Marine Containers (CIMC), and China Railway Construction Corporation (CRCC) and China Railway Group (CRG) in railway construction.Sum

10、mary of our most preferred stocks under the multimodal transport themeIndustrialEquitiesRobin XuAnalyst S1460511010012 HYPERLINK mailto:bin.xu bin.xu+86-213-866 8872Thomas WadewitzAnalyst HYPERLINK mailto:thomas.wadewitz thomas.wadewitz+1-212-713 6116Cristian Nedelcu, CFAAnalyst HYPERLINK mailto:cri

11、stian.nedelcu cristian.nedelcu+44-20-7568 4375Phyllis WangAnalyst S1460517100001 HYPERLINK mailto:phyllis.wang phyllis.wang+86-213-866 8964Wei ShenAnalyst S1460518060001 HYPERLINK mailto:wei.shen wei.shen+86-213-866 8897Qian Yu Analyst S1460519060002 HYPERLINK mailto:qian.yu qian.yu+86-213-866 8684H

12、erbert LuAnalyst S1460517110002 HYPERLINK mailto:herbert.lu herbert.lu+86-213-866 8873Fan Ping Associate HYPERLINK mailto:fan.ping fan.ping+86-213-866 8830(US$ bn)(LCY)(LCY)20E21E20E21E20E21E20E21E20E21ERailway logisticsTielong Logistics600125.SS1.1Buy7.005.91.12.07%10%Container

13、 manufacturerCIMC000039.SZ5.1Buy11.609.7228.84.148%33%Railway constructionCRCC1186.HK15.1Buy12.308.610.911.09%11%CRG0390.HK14.1Buy7.104.8010.911.217%13%NameRic codeMkt capRatingPTPricePE (x)P/BV (x)Div. yld (%)ROE (%)EPS growthNote: Above data

14、as of 16 January 2020 Source: Thomson Reuters, UBS estimates HYPERLINK /investmentresearch /investmentresearchThis report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 36. UBS does and seeks to do business with companies covered in its research

15、 reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Contents HYPERLINK l _TOC_250002 PIVOTAL QUESTIONS6 HYPER

16、LINK l _TOC_250001 Q: How will strong multimodal transport growth affect various sectors?6Rising multimodal penetration leads to premium logistics performance6Railway and container are two pillars for multimodal transport10What benefits can multimodal transport bring?15Case studies of multimodal tra

17、nsportation in US and Europe19 HYPERLINK l _TOC_250000 What drives multimodal transport growth?23Sector implications from rising multimodal26China Industrials related research reviewAsia Industrials: US$1.5trn infrastructure projects in South/SE Asia can Chinas Belt and Road Initiative help? 11/1/20

18、19China Toll Road: Turning positive on attractive sector dividend yields 10/15/2019China Railway In-depth Series #5: Will low URT operating return discourage URT investment? 9/11/2019China Railway In-depth Series #4: Can China railway system generate reasonable returns? 7/25/2019China Industrials: C

19、hina infrastructure back in focus: deciphering FAI growth by sector 7/17/2019China Railway In-depth Series #3: How will highway-to-railway conversion affect freight transportation in China? 1/14/2019China Railway In-depth Series #2: UBS Evidence Lab: What did we observe from our analysis of HSR comm

20、ute times? 8/3/2018China Railway In-depth Series #1: UBS Evidence Lab: how significant is the high- speed railway network effect? 7/3/2018China Construction: UBS Evidence Lab inside: from builders to operators, what is the market missing in PPP? 5/29/2019Robin XuAnalyst S1460511010012 HYPERLINK mail

21、to:bin.xu bin.xu+86-213-866 8872Thomas WadewitzAnalyst HYPERLINK mailto:thomas.wadewitz thomas.wadewitz+1-212-713 6116Cristian Nedelcu, CFAAnalyst HYPERLINK mailto:cristian.nedelcu cristian.nedelcu+44-20-7568 4375Phyllis WangAnalyst S1460517100001 HYPERLINK mailto:phyllis.wang phyllis.wang+86-213-86

22、6 8964Wei ShenAnalyst S1460518060001 HYPERLINK mailto:wei.shen wei.shen+86-213-866 8897Qian Yu Analyst S1460519060002 HYPERLINK mailto:qian.yu qian.yu+86-213-866 8684Herbert LuAnalyst S1460517110002 HYPERLINK mailto:herbert.lu herbert.lu+86-213-866 8873Fan Ping Associate HYPERLINK mailto:fan.ping fa

23、n.ping+86-213-866 8830UBS Research THESIS MAP MOST FAVOUREDLEAST FAVOUREDTielong Logistics, CIMC, CRCC, CRGShandong Hi-speed (SDHS), China CAMCEngineeringPIVOTAL QUESTIONSQ: How will strong multimodal transport growth affect various sectors?Leveraging an advanced infrastructure network (especially r

24、ailways and highways), we expect multimodal transport growth to improve transport efficiency and reduce logistics costs. We project volumes of multimodal freight transport to deliver a 10% CAGR in 2021-25E and increase its penetration from 3% in 2018 to 4.5% in 2025E. HYPERLINK l _bookmark0 moreQ: W

25、ill PPP projects in China generate reasonable lifecycle returns?Yes. We believe investors are concerned about the high gearing and poor visibility on profit associated with public-private partnership (PPP) projects. However, we think these concerns are overdone and we expect: 1) build-transfer (BT)

26、projects to help improve constructions gross margins; and 2) build- operate-transfer (BOT) projects to generate strong cash flow and improve profit in the long term.UBS Evidence Lab inside: from builders to operators, what is the market missing in PPP? 5/29/2019Q: Can the Belt and Road Initiative he

27、lp South/Southeast Asias infrastructure projects?Yes. Our proprietary infrastructure demand analysis identified US$1.5trn of infrastructure projects in India, Indonesia, Thailand, Malaysia, the Philippines, Pakistan and Vietnam for 2020-24E. We believe inadequate land transport connectivity and wate

28、r supply are potential investment opportunities, which could also accelerate economic growth in these developing economies.US$1.5trn infrastructure projects in South/SE Asia can Chinas Belt and Road Initiative help? 11/1/2019WHATS PRICED IN?Limited impact from multimodal transport. Due to the comple

29、xity of analysing the potential impact of multimodal transport, the market expects almost no impact for various sectors. The progress of the H2R conversion was slower than we had expected in 2019, prompting the market to question whether the H2R conversion target was achievable.UBS VIEWPositive on r

30、ailways and container manufacturers; negative on toll roads. We think railway companies (construction, equipment and operators), container manufacturers and logistics companies are the major beneficiaries of multimodal transport growth, while toll-road operators could suffer.EVIDENCEPolicy support f

31、rom the central government and our proprietary study of current multimodal networks and infrastructure suggest more freight-dedicated railway lines need to be built and more containers and multimodal-related equipment are needed for seamless transfers of transport modes.Comparison of various transpo

32、rtation modes in ChinaAvg. travelling distanceMaximum speedTransport costPassengers related:Check-in (out) procedure/Connection/Comfortability/Pollution Passenger: 420km Cargo: 715kmPassenger: 350km/hr Cargo: 160km/hrPassenger: Rmb0.40/km*person Cargo: Rmb0.14/km*tonNormal/5,000+ railway stations/Hi

33、gh/LowPassenger: 1,756km Cargo: 3,553kmPassenger: 1,050km/hr Cargo: 1,050km/hrPassenger: Rmb0.5-2/km*person Cargo: Rmb2.5-3.0/km*tonComplicated/235 airports/Low/HighPassenger: 29km Cargo: 1,421kmPassenger: 30km/hr Cargo: 30km/hrPassenger: Rmb 1-2/km*person Cargo: Rmb0.07/km*tonNormal/Selected locati

34、ons on rivers or at sea/Medium/LowPassenger: 68km Cargo: 180kmPassenger: 120km/hr Cargo: 120km/hrPassenger: Rmb0.25/km*person Cargo: Rmb0.20/km*tonVery easy/Well connected/Low/HighSource: Wind, UBS estimatesChina Industrials 17 January 2020 4Figure 1: What is multimodal transport and how does it wor

35、k?Note: Circled numbers correspond to the numbering in Figure 2.Source: National Development and Reform Commission (NDRC), Ministry of Transport (MoT), UBSChina Industrials 17 January 2020 5Figure 2: How does multimodal transport development affect various sectors? Container Related partiesRelated i

36、ndustriesPositive Neutral Negative Representative companies1Transport modeRailway construction / operatorCRCC, CRG, CCCC, CSCEC, Power China, Daqin Railway, Tielong Logistics, Guangshen Railway2Transport modeToll road operatorJiangsu Expressway, Zhejiang Expressway, Shandong Hi- speed, Zhongyuan Exp

37、ressway, Anhui Expressway3Transport modePort operatorCMPort, COSCO Shipping Ports, SIPG, Qingdao Port, HPH Trust4Transport modeShippingCOSCO SHIPPING, Maersk, SITC International, Chang Jiang Shipping Group Phoenix5Transport vehicleRailway equipmentZhuzhou CRRC, CRSC, CRRC, China Railway Hi-tech Indu

38、stry, China Railway Construction Heavy Industry6Transport vehicleHeavy-duty truckWeichai Power, Sinotruck7Transport vehicleShipbuildingYangzijiang Shipbuilding, New Times Shipbuilding, Waigaoqiao Shipbuilding8Standardised transport unitContainer / trailer manufacturingCIMC, Singamas, COSCO Shipping,

39、 CIMC Vehicle9Multimodal terminalConstructionCRCC, CRG, CCCC, CSCEC, Power China10 Multimodal equipmentMachinerySany, XCMG, Zoomlion, ZPMC, Lonking, Inovance, Estun,Siasun, Anhui Heli, Hangcha Group11 Multimodal integratorLogistics / E-commerceSinotrans, SF Holding, ZTO, Suning, JD.com, Alibaba12 Mu

40、ltimodal information systemLogistics / E-commerceSF Holding, ZTO, Suning, JD.com, AlibabaNotes: Full company names: CCCC=China Communications Construction Company; CSCEC = China State Construction Engineering Corporation; Power China = Power Construction Corporation of China; Tielong Logistics = Chi

41、na Railway Tielong Container Logistics; CMPort = China Merchants Port; SIPG = Shanghai International Port Group; HPH Trust = Hutchison Port Holdings Trust; Zhuzhou CRRC = Zhuzhou CRRC Times Electric; CRSC = China Railway Signal & Communication; CRRC = CRRC Corporation; Sinotruck = China National Hea

42、vy Duty Truck Group; Singamas = Singamas Container Holdings; Sany = Sany Heavy Industry; XCMG = Xuzhou Construction Machinery Group; Zoomlion = Zoomlion Heavy Industry Science & Technology; ZPMC = Shanghai Zhenhua Heavy Industries; Inovance = Shenzhen Inovance Technology; Estun = Estun Automation; S

43、iasun = Siasun Robot & Automation; ZTO = ZTO Express; Suning = S; Alibaba = A.Source: NDRC, MoT, UBSChina IndustrialsUBS ResearchPIVOTAL QUESTIONSQ: How will strong multimodal transport growth affect various sectors?UBS VIEWLeveraging an advanced infrastructure network (especially railways and highw

44、ays), we expect multimodal transport growth to improve transport efficiency and reduce logistics costs. We project volumes of multimodal freight transport to deliver a 10% CAGR in 2021-25E and increase its penetration from 3% in 2018 to 4.5% in 2025E.EVIDENCEThe National Development and Reform Commi

45、ssion (NDRC) and Ministry of Transport (MoT) proposed a series of policies to support multimodal transport: the H2R conversion, more national logistics hubs (NDRC and MoT project 212 national logistics hubs to be built in 2019-25), and Building A Leading Transport Nation.Our proprietary study of mul

46、timodal networks and infrastructure: 1) our bottom-up analysis of freight-dedicated railways revealed around 1,600km and 3,900km of last-mile railways could be built in 2019-20E and 2021-25E, respectively; 2) standardisation and technological improvements of multimodal equipment are needed to overco

47、me the bottlenecks the transport modal change is experiencing.Case studies looking at the US and Europe highlighted developed economies usually have higher multimodal penetration rates and are more reliant on railways than China for the transportation of freight.WHATS PRICED IN?The progress of the H

48、2R conversion was slower than we had expected in 2019, prompting the market to question whether the H2R conversion target was achievable. We think investors are unaware of the potential growth in multimodal transportation.Rising multimodal penetration could lead to premium logistics performanceCompa

49、red with the US and the EU, where the multimodal transport market had been cultivated since the 1950s, Chinas multimodal penetration rate is still low. However, we believe there is potential for Chinas growth to accelerate in the next few years. We project significant improvements in multimodal pene

50、tration in the long term, leveraging the improving infrastructure networks and diversified technological innovation. As a result, we think Chinese industries could benefit from improved efficiencies in: 1) transportation networks, with savings on logistics costs; and 2) freight transportation.Potent

51、ial for strong multimodal transport growth and higher penetrationFigure 3: Chinas multimodal penetration rate is still low compared with the US and the EUFigure 4: but could catch up quickly in the next few years45%40%35%30%25%20%15%40%14%30%5.6% -12.4%15%2.8% -4.5%10%ChinaUSChinaUSEUChinaUSEUMultim

52、odalRail container penetration Rail-water penetration rate penetration raterate1.5% -3.4%20%12%10%8%6%4.6%3.2%5.6%6.8%8.3%12.4%CAGR (2021-25): 12%9.9%CAGR (2021-25): 10%4.5%3.6%10%5%0%4% 2.9%2%2.9%2.8% 3.0% 3.3%3.4%2.3%CAGR (2021-25): 12%1.1% 1.2% 1.5% 1.8% 2.1%0%20172020E2025ENote: 1) Multimodal pe

53、netration = total multimodal volume/total freight volume;rail container penetration = railway container volume/total railway freight volume; 3) rail-water penetration = rail-water container throughput/total container throughput at portsSource: MoT, UBS estimates2015 2016 2017 2018 2019E 2020E2025EMu

54、ltimodal penetration rateRail container penetration rate Rail-water penetration rateSource: MoT, UBS estimatesOwing to proactive investments in Chinas infrastructure, Chinas logistics performance in 2018 almost caught up with developed countries, according to the World Banks Logistics Performance In

55、dex (LPI) reports. Out of the six dimensions measured by LPI (Figure 7), China surpassed the average level of developed countries in terms of infrastructure and international shipments. With wider multimodal transport application and leveraging an advanced, growing infrastructure network, we believe

56、 Chinas logistics offering could become one of the most efficient globally in the next 5-10 years.Logistics performance close to the OECD level; multimodal provides further upsideFigure 5: The gap in LPI between China and the OECD countries narrows (2018)Figure 6: owing to Chinas infrastructure impr

57、ovementsOverall LPI43.7 Timeliness 4.0 3.8 3.7 33.63.321 3.3 3.0 Customs 3.5 Tracking & tracing 3.7 3.4 3.7 0 3.4 3.6 3.3 3.5 3.2 3.7 Infrastruct ure 3.8 ceLogistics competen 3.7Intl 3.5 shipmentsChina: 2007China: 2018High income OECD: 2018Source: World BankSource: CHINA RAILWAY, MoT, China Port Ass

58、ociationMultimodal transport plays a critical role in the Building A Leading Transport Nation policyAccording to the State Councils Circular published in September 2019, China aims to build a leading transportation nation by 2050. We believe multimodal transport could be critical to this. Key tasks

59、include improving comprehensive transportation networks and services, promoting advanced transportation equipment and technology, and developing green transportation. We believe these targets align with LPI-measuring dimensions and vary in different stages:2018-20E: Multimodal transport is an import

60、ant part of the H2R conversion initiatives as well as the State Council and MoTs three-year blue-sky defence plan. We believe the proportion of railways in total freight transportation will continue increasing.2021E and beyond: A comprehensive and high-quality multimodal network will likely be estab