event:
On December 31, 2021, the national development and Reform Commission issued the notice of the general office of the national development and Reform Commission on accelerating the work related to real estate investment trusts (REITs) in the field of infrastructure (hereinafter referred to as document No. 1048).
comment:
On the basis of Document No. 958, Document No. 1048 accelerated the pilot work of public offering REITs of infrastructure, strengthened supervision and promoted the formation of a virtuous circle of the project: 1) the warehousing scope was relaxed and the project was required to “enter as much as possible as possible if it is willing to enter”; 2) Effectively speed up the project progress, reduce the project preparation cycle as much as possible, speed up the handling of relevant formalities such as no objection letter, and speed up the application progress; 3) Supervise the reinvestment of recovered funds to form a virtuous circle.
The warehousing scope is relaxed compared with document No. 958, which requires the project to “be willing to enter and should enter”: in terms of project reserve management, Document No. 1048 emphasizes that the project should be “willing to enter and should enter”, and it is not allowed to refuse the project warehousing for any reason. At the same time, it points out that it is necessary to timely provide classified guidance for the project and strengthen the whole process services such as project planning, reserve and declaration, Promote preparations for issuance. Compared with document No. 958, which states that “all projects shall be included, and projects not included in the project library shall not be declared to participate in the pilot”, Document No. 1048 has relaxed the scope of warehousing, and has a stronger willingness to absorb projects.
Strengthen the arrangement of each stage of REITs declaration and speed up the declaration progress: Document No. 1048 makes corresponding arrangements for each stage of infrastructure public offering REITs declaration to promote the accelerated declaration of the project. 1) Stage before application: Document No. 1048 points out that the person in charge of each reserve project should strengthen communication with the original equity holders and fund managers, and the local development and reform commissions should carry out project scheduling once a month to carry out targeted guidance, so as to lay a good foundation for the smooth application and issuance of the project. 2) Declaration preparation stage: No. 1048 civilization clearly proposed that the national development and Reform Commission should strengthen communication and coordination with various government departments and reduce the project preparation cycle as much as possible. 3) Project application stage: Document No. 1048 points out that “there is no quota limit and regional difference for all kinds of application projects. As long as they meet the conditions and have excellent quality, they can apply for recommendation”, further relax the relevant restrictions and accelerate the application of public infrastructure REITs nationwide.
Strengthen the tracking and supervision of the reinvestment of recovered funds to form a virtuous circle of funds: compared with the proposal of “guiding the recovered funds for the construction of new projects” in Document No. 958, Document No. 1048 puts more emphasis on the supervision of the recovered funds, It clearly pointed out that “it is necessary to strengthen the tracking and supervision of the use of recovered funds, regularly dispatch whether the recovered funds are used in time, whether they are invested in the construction of new projects promised by the original stakeholders, and whether the use mode is capital injection, and supervise the original stakeholders of the project to earnestly fulfill their commitments”.
Investment suggestion: on the basis of Document No. 958, Document No. 1048 will accelerate the pilot work of infrastructure public offering REITs, strengthen supervision and promote the project to form a virtuous circle. The scope of public offering REITs for infrastructure in the early stage is narrow, which can not solve the problem of revitalizing large-scale stock assets or relieve the leverage pressure of government departments. We emphasize that the follow-up policies may continue to be relaxed and the supporting documents will be gradually implemented. The continuous implementation of infrastructure public offering REITs will lead to the revaluation of the value of construction companies. With the improvement of laws and regulations, the listing attribute of REITs will be strengthened, or 1) the expected upward revision of medium-term infrastructure investment growth; 2) The improvement of the statements of construction enterprises (thickening the income statement and reducing the asset liability ratio), and the subsequent expansion will break through the limitation of asset liability ratio. Suggestions: 1) intangible assets in the statement account for a high proportion of total assets, which will directly benefit from China Communications Construction Company Limited(601800) , Power Construction Corporation Of China Ltd(Powerchina Ltd)(601669) and China’s energy construction promoted by infrastructure REITs; 2) Benefit from the expected uprevision of infrastructure investment; With the help of infrastructure REITs, the subsequent expansion can break through the asset liability ratio limit of China Railway Construction Corporation Limited(601186) , China Railway Group Limited(601390) , China State Construction Engineering Corporation Limited(601668) , Metallurgical Corporation Of China Ltd(601618) , China National Chemical Engineering Co.Ltd(601117) .
Risk analysis: infrastructure project operation risk, fund price fluctuation risk, liquidity risk, tax and other policy adjustment risks.
