On February 18, 14 departments including the national development and Reform Commission issued several policies on promoting the recovery and development of difficult industries in the service industry, which filled the policy weakness in steady growth. The document launched a series of tax cuts and fee reductions and financial support measures for the overall service industry, further proposed “precision drip irrigation” relief measures for the most difficult catering, retail and tourism industries, and emphasized the “precision prevention and control” under the tone of “dynamic clearing”.
Under the background of the steady growth policy, the policy shows the government’s attitude towards stimulating the recovery of consumption. As the most direct and serious area of consumption affected by the epidemic, the marginal effect of the policy is significant. We believe that this will strengthen the logical investment main line of epidemic repair in the consumer industry. At the same time, it also highlights the importance of consumption. It is suggested to increase the layout. The concern raised by the reference in the document to “Guide Internet platform enterprises such as takeout to further reduce the service fee standard of catering merchants” has been excessive. We believe that the actual marginal impact is limited and does not mean further changes in the regulatory policy of the platform.
In addition to the traditional counter cyclical tools such as infrastructure and real estate, the recovery and development of the service industry is equally important for the stability of economic growth and the boost of market confidence. The launch of the service industry rescue policy has made up for the policy shortcomings in steady growth to a certain extent. At present, the service industry accounts for about 53% of GDP and 48% of employed persons. Compared with industrial production, the recovery of service industry under the impact of the epidemic is relatively slow. For example, the average growth rate of social security in 2021 was only 3.9%, far lower than the level before the epidemic; In January 2022, the PMI of service industry was only 50.3, which fell to the lowest value in five months. In order to implement the requirements of the central economic work conference on “maintaining stability and seeking progress while maintaining stability”, the national development and Reform Commission and other departments issued several policies on promoting the recovery and development of difficult industries in the service industry (hereinafter referred to as the “document”) on February 18, 2022. Overall, the service industry is facing difficulties in consumption scenarios and consumption intentions. Starting from the consumption scenarios, the document is expected to play a positive role in the recovery of the service industry. How to avoid the downward spiral of consumption and income and boost the Consumption Willingness of the service industry, the follow-up policies deserve continuous attention.
For the overall service sector, inclusive rescue policies have been introduced, and tax cuts and fee reductions resonate with financial support. Under the impact of the epidemic, the service industry was seriously damaged. The document continued the previous policy tone and focused on tax reduction and fee reduction and financial support to bail out the service industry. (1) In terms of tax reduction and fee reduction, the document puts forward a number of relief policies, including the continuation of the value-added tax plus Deduction Policy for the service industry, the expansion of the scope of application of the “six taxes and two fees”, the appropriate reduction and exemption of real estate tax and urban land use tax, and the increase of pre tax deduction of equipment and appliances for small, medium and micro enterprises. Considering that the annual new tax cuts and fee reductions in 2021 exceeded 1.1 trillion yuan, of which service enterprises enjoyed more than 610 billion yuan, we expect that the scale of tax cuts and fee reductions in the service industry may also reach hundreds of billions in 2022. (2) In terms of financial support, the document proposes to make good use of the 2.2 trillion fund and 400 billion rolling amount of refinancing reduced twice in 2021, and promote the financial system to transfer profits to the real economy by reducing loan interest rates, so as to help the service industry to bail out.
Aiming at the catering industry, retail industry and tourism industry, which are the most difficult in the epidemic, the document puts forward a series of “precision drip irrigation”
Type relief measures to help its short-term business recovery and long-term healthy development. Overall, the specific relief measures proposed in the document can be summarized in the following five aspects. (1) Provide epidemic prevention support required for operation. The catering industry and retail industry are operating in a public environment, and the expenditure on epidemic prevention measures such as nucleic acid and killing is high. The document proposes to encourage qualified places to give epidemic prevention financial support to catering and retail enterprises, and in principle, give employees a subsidy of no less than 50% for regular nucleic acid testing in 2022. (2) We will deepen various measures to reduce taxes and fees. The document authorizes the provincial government to flexibly implement phased deferred payment of unemployment insurance and work-related injury insurance for catering, retail and tourism enterprises, so as to reduce the social security burden of enterprises; We will continue to implement the policy of temporarily withdrawing the deposit for tourism service quality for the tourism industry. (3) Guide financial services to the real economy. The document proposes to strengthen the construction of multi-level banking system, strengthen inclusive financial support and effectively increase financial supply; Strengthen information sharing among departments, improve risk pricing ability, and issue more credit loans and corporate credit bonds; Government financing guarantee institutions are encouraged to provide credit enhancement support, and insurance institutions are encouraged to optimize products and services. (4) Give play to the platform’s economic and social responsibilities. The document proposes to guide Internet platform enterprises such as takeout to further reduce the service fee standard of merchants in the catering industry, and give phased preferential service fee to merchants in medium and high-risk areas. The idea of guiding the platform economy to fulfill its social responsibility has been reflected in the opinions on promoting the healthy and sustainable development of the platform economy issued in January 2022. (5) Strengthen the supporting role of public expenditure. The document proposes to use financial funds to support the construction of Shenzhen Agricultural Products Group Co.Ltd(000061) supply chain system and give full play to the function of emergency supply guarantee; In government procurement and other matters, we should give appropriate preference to small and medium-sized enterprises to ensure fund payment.
For the epidemic prevention and control measures, the document emphasizes the further realization of “accurate prevention and control” under the tone of “dynamic clearing”. It has become an important policy goal to control the epidemic at a lower cost and in a shorter time, so as to reduce the impact of the epidemic on economic and social development and people’s production and life. The document further specifies to avoid “excessive prevention and control” and “Five Prohibitions”
In addition, it also puts forward additional “three prohibitions” for the service industry, which reflects the care of the policy for the service industry. (1) Over prevention and control that is not scientific enough and too strict must be adjusted. In addition to disturbing the normal order of the service industry, which is not conducive to stable employment and steady growth, the consumables and labor costs of testing and inspection have also caused a great financial burden. In May 2020, Wuhan carried out the full staff test of “city restart”. Hubei Province once estimated that the cost of completing the test for this mega city with a population of more than 11 million would exceed 1 billion yuan. Although the promotion of centralized procurement in recent two years has greatly reduced the cost, the full inspection will still bring huge consumption to local finance and medical insurance. (2) Precise prevention and control will continue to be optimized. China has accumulated rich experience in prevention and control. Big data has become a magic weapon for key industries and regions, rapid tracking of flow regulation “golden 24 hours”, and the landing of administrative forces and expert resources at the grass-roots level. We expect that the twists and turns of the global epidemic will be repeated, and the idea of strict external defense input will not be adjusted, but the “dynamic zeroing” of domestic whole chain accurate prevention and control will continue to be optimized. In the context of more widespread vaccination, accelerated development of domestic specific drugs and more rational public opinion, it is expected to ensure that important meetings such as the Winter Olympic Games, the two sessions, the Asian Games and the 20th National Congress are foolproof, but also learn from the experience of Shanghai and other places, avoid one size fits all prevention and control and increase at all levels, and help effectively restore the normal order of the development of the service industry.
The orientation of the support measures for the inclusive relief is clear, and small low profit enterprises and individual industrial and commercial households are the most marginal beneficiaries. The first part of the document puts forward a total of 10 point plans for the inclusive relief and support measures for the service industry, mainly including tax relief and financial support. The supporting measures of inclusive relief are mainly to expand the scope of applicable groups and the intensity of relief on the basis of continuing the tax relief policy. Small and micro enterprises (enterprises that meet the three conditions of annual taxable income of no more than 3 million yuan, no more than 300 employees and total assets of no more than 50 million yuan) and individual industrial and commercial households have the greatest marginal benefits.
1) “continue the policy of adding and deducting value-added tax of service industry. In 2022, the current deductible input tax of taxpayers in production and living services will continue to be added and deducted by 10% and 15% respectively”. The policy continues from the announcement of the Ministry of Finance and the State Administration of Taxation on clarifying the policy of value-added tax addition and deduction of living services, which will be implemented from October 1, 2019, and the new document has been further extended.
2) “in 2022, the applicable subjects of the provincial people’s government’s reduction of ‘six taxes and two fees’ within the range of 50% of the tax will be expanded from small-scale VAT taxpayers to small low profit enterprises and individual industrial and commercial households”. The policy continues from the notice of the Ministry of Finance and the State Administration of Taxation on implementing the preferential tax reduction and exemption policy for small and micro enterprises, which will be implemented from January 1, 2019. The new document has been further extended, and small and micro enterprises and individual industrial and commercial households will be included in the implementation object.
3) “in 2022, increase the pre tax deduction of equipment and appliances of small, medium-sized and micro enterprises”; “We will continue to implement the stable post return policy of inclusive unemployment insurance for enterprises that do not lay off staff or reduce layoffs, and increase the return proportion of small, medium-sized and micro enterprises from 60% to 90% in 2022”; “In 2022, small and micro enterprises in the service industry and individual industrial and commercial households in the county-level administrative areas where the areas listed as medium and high risk areas of the epidemic are located will rent state-owned houses, and the rent will be reduced for 6 months in 2022 and 3 months in other areas”; “In 2022, guide banks to give full play to the dual functions of the total amount and structure of monetary policy tools, and give priority to supporting difficult industries, especially small and micro enterprises and private enterprises in the service industry”; “Give full play to the guiding role of market-oriented tools to support Pratt Whitney microenterprises in 2022”; “In 2022, we will continue to promote the reduction of fees and profits in the financial system and reduce the pressure on the operating costs of small and micro enterprises and individual industrial and commercial households in the service industry”. On the whole, small and micro enterprises and individual industrial and commercial households are the key marginal support objects of this round of policies.
Industry specific policies: catering, retail and tourism enterprises are supported in the suspension and payment of some expenses and income generation. The second to sixth parts of the document put forward differentiated policy guidance in the direction of tax relief, government subsidies and financing support according to the characteristics of subdivided industries such as catering industry, retail industry, tourism, highway, railway, waterway transportation and civil aviation. From the perspective of catering tourism, cost side support includes: subsidies of no less than 50% for regular nucleic acid testing of catering enterprise employees; Guide Internet platform enterprises such as takeout to further reduce the service fee standard of catering merchants; For qualified travel agencies, 80% of the deposit for tourism service quality shall be maintained. Revenue side support includes: when the government purchases accommodation, conference, catering and other service projects, strictly implement the provisions on the amount of expenditure, and shall not restrict relevant enterprises from participating in government procurement based on star rating and ownership; Government agencies, enterprises and institutions are encouraged to entrust the formulation, organization and coordination of trade union activities and exhibition activities held in accordance with the regulations to travel agencies. For the retail industry, it is emphasized that the central government supports the construction of County commercial system through the development funds of service industry, and promotes “one upward ( Shenzhen Agricultural Products Group Co.Ltd(000061) upward)” and “three downward (supply chain, logistics distribution, business and service downward)”; At the same time, support 10 provinces (autonomous regions and municipalities directly under the central government) to further strengthen the construction of agricultural supply chain system and improve the Shenzhen Agricultural Products Group Co.Ltd(000061) circulation backbone network. It is mainly reflected in the use of central finance to improve the commercial system infrastructure of sinking market.
Emphasizing “precise prevention and control” is conducive to promoting the overall steady recovery and growth of the travel industry. The seventh part of the document reiterates the prevention of “relaxed prevention and control”, while emphasizing the avoidance of the tendency of “excessive prevention and control”, and puts forward the “four precisions” and “three prohibitions”. “Four precisions” refers to the establishment of accurate monitoring mechanism, the improvement of accurate identification ability, the strengthening of accurate control and isolation, and the promotion of the concept of accurate protection; “Three prohibitions” refer to: first, it is not allowed to break through the corresponding provisions on epidemic prevention and control to close cities and districts, and it is not allowed to interrupt public transport unnecessarily or without reporting for approval; Second, it is not allowed to implement shutdown measures and extend the shutdown time of restaurants, supermarkets, scenic spots, cinemas and related service places without flow regulation and policy basis; On the basis of the State Council’s policy of joint prevention and control of the epidemic, it is not allowed to increase the service industry without authorization. The government further released the statement of precise control of the epidemic and prevention of overweight at all levels, with a clear purpose of improving people’s travel convenience, which has a direct driving effect on optimizing the business environment of the service industry and promoting the improvement of demand.
Market impact: the marginal repair logic is strengthened, but the relevant provisions guiding the platform economy to make profits have raised concerns. From the perspective of the capital market, we believe that the most important signal release is that consumption, as one of the important supports for the economy, is the primary support direction of the government under the background of the “stable growth” policy. The service industry is the most direct and serious affected by the epidemic in the consumption field, and the difficulties are most obvious at present. The necessity of policy support is highlighted.
Although the pull or actual effect of the policy terms themselves is difficult to be reflected in a centralized way, the potential role of promoting marginal repair in various fields of the service industry can be clearly expected. In particular, the management policy of “precise prevention and control” has a direct impact on the release of relevant demand by improving the travel environment and optimizing consumption scenarios. We believe that this has strengthened the logical investment main line of epidemic repair in the consumer industry, and we suggest a positive layout. In addition, the reference in the document to “guide takeout and other Internet platform enterprises to further reduce the service fee standard of catering merchants” has aroused the market’s concern about the platform economy. Over the past year, the Internet economy has experienced the adjustment impact of various regulatory policies, so the market is more sensitive and emotional impact is easier to produce. However, from the perspective of the actual impact on the fundamentals of enterprises, we think there is no need to worry. The main reasons are as follows: first, it clearly emphasizes the “phased” and “regional”. Second, in the first half of 2021, the delivery platform represented by meituan split the fee collection, one part is the technical service fee (6% – 7%), based on the supply and demand matching of merchants on the platform, and the other part is based on the performance service, according to the distribution distance The performance service fee charged for the time period and the shortage of transportation capacity. Meituan’s basic service rate is at a very low level in the Internet industry, both in China and globally. Third, since the outbreak of the epidemic, meituan has successively carried out layered adjustment of rates, giving preferential treatment and increasing subsidies to difficult merchants. The marginal impact of the document is mainly reflected in the need to further strengthen the support for merchants in medium and high-risk areas. The specific impact is strongly related to the overall recovery rhythm of the epidemic. We believe that the formulation of the national development and Reform Commission and other departments is not intended to require the takeout platform to reduce the fee across the board. The original intention is mainly to help merchants reduce certain operating costs in difficult times, and reducing the cost is not equal to reducing the rate. Similarly, meituan will give merchants free marketing promotion, epidemic prevention materials Various supporting policies such as digitalization and online are back feeding to merchants. In turn, the business improvement of merchants is also a positive driving force for the platform (the delivery order volume of meituan in 20q3 increased by 30% +, exceeding the normal 25%). Overall, we believe that the concerns caused by the relevant provisions guiding the platform economy to make profits have been excessive. We believe that the marginal impact of the basic level on the platform is limited, and the policy level does not mean a new round of policy supervision. We suggest rational treatment.
Risk factors: the epidemic situation exceeded expectations, the macroeconomic growth rate was lower than expected, the industry competition intensified, corporate governance, etc.
Investment strategy: To sum up, we believe that several policies on promoting the recovery and development of difficult industries in the service industry
The release of shows the government’s clear attitude towards stimulating the recovery of consumption. As the industry most affected by the epidemic in the consumption field, the precision of epidemic control measures and the marginal driving effect of tax, financial and other support will be very obvious. For catering, retail, tourism and other industries affected by travel restrictions, the policy is favorable. We reiterate that the main line of investment in epidemic repair will run through 2022, and the stock price performance of relevant industries and companies will be deduced in two stages: expected warming and performance realization. At this stage, it is still in the expected stage. Various factors such as favorable policies, relaxation of control and improvement of the effect of vaccine specific drugs will form a catalyst. We believe that the main line will continue to fluctuate upward. In combination with industry attributes, track pattern, potential growth rate and company valuation, the service sector recommends China Tourism Group Duty Free Corporation Limited(601888) , Huazhu group, Btg Hotels (Group) Co.Ltd(600258) , Shanghai Jin Jiang International Hotels Co.Ltd(600754) , Helens, jiumaojiu, Tongcheng Yilong, Ctrip, Songcheng Performance Development Co.Ltd(300144) , China Cyts Tours Holding Co.Ltd(600138) . At the same time, for the Internet leader represented by meituan, we believe that there is no need to worry. The framework and impact of the policy have stabilized. The advantages of the platform have not been affected, which will help it realize its own value smoothly, and the decline may enhance the opportunity of long-term layout.
