China's hydropower high-speed railway concept is self-defeating

It may be a coincidence that on the eve of the “7.23” EMU catastrophic accident, the prospectus signed by China National Hydroelectric on July 22 will be submitted to the review and approval committee for review on July 29th. Pre-disclosure shows that China Hydropower plans to issue no more than 3.5 billion shares on the Shanghai Stock Exchange, and plans to raise funds 17.316 billion yuan, thus becoming the largest IPO this year.

The main water conservancy and hydropower industry is gradually losing power.

It is ridiculous that although the company is called “China Hydropower”, it is engaged in the construction of hydropower and water conservancy, and it is actually related to the high-speed rail that has just happened. From 2008 to 2011, the company undertook the construction of the Beijing-Shanghai high-speed railway. The contract amounted to 14.27 billion yuan. China's hydropower is quite proud of this, and the prospectus has mentioned in many places that it has become one of the four companies that have undertaken the construction of China’s first high-speed railway with world-class standards. (The other three are: China Railway Construction, 33.74 billion yuan, China Railway 219.6 Billion yuan, China's establishment of 13.72 billion yuan), and regard it as "the first item of non-hydraulic hydropower projects under construction". Unfortunately, the recent high-speed rail concept stocks are facing a crisis of confidence. The company chose to go public at this time. The concept of high-speed trains obviously turned from the original booster to a stumbling block.

The prospectus shows that China's hydropower is mainly engaged in engineering contracting, power investment and operation, equipment manufacturing and leasing, real estate development and other businesses, especially project contracting, accounting for 91.73% and 79.77% of the company's total operating income and gross profit. However, the data shows that as China’s hydropower projects that have undertaken more than 65% of large- and medium-sized hydropower stations and water conservancy projects in China, the proportion of water conservancy and hydropower project contracting has dropped from 67.72% in 2008 to 55.4% in 2009, and it has dropped again to 2010. 52.04%, the contracting of non-hydraulic hydropower projects rose from 32.28% in 2008 to 47.96% in 2010, nearly half of the country; as for hydropower investment, accounting for only 2%.

Why is "China Hydropower" unworthy of its name? The reason is simple. During the “11th Five-Year Plan” period, the funds invested by the Chinese government for transport infrastructure construction reached 3.8 trillion yuan, which was 73% higher than during the “10th Five-Year Plan” period, and the total investment in water conservancy construction nationwide was 600 billion Yuan. In the meantime, in 2010, the total installed capacity of electric power in China increased by 10.08%, of which hydropower only increased by 8.72%. Obviously, it is difficult for water conservancy and hydropower to work hard, and traffic construction, especially high-speed railways, is showing explosive growth.

A shares were investment-pulled economy. After the “7.23” car rear-end accident, the media searched more than a hundred listed companies to get involved in the railway industry chain. There were only 30 high-speed train concept stocks. Why are so many listed companies engaged in railroads and infrastructure? The answer is policy support. In other words, in recent years, the capital raising rate of infrastructure-owned central enterprises alone is no less than 150 billion yuan, including China Construction, China Metallurgical, China Railway, China Railway Construction, China Chemical, China South Locomotive, China CNR, and the upcoming IPO. China's hydropower, etc., these companies have become the largest ethnic group in addition to bank shares, saying that China Railway, China Chemicals, and China Metallurgy are actually nothing more than infrastructure companies under the Ministry of Railways, the Ministry of Chemical Industry, the Ministry of Metallurgy, and the Ministry of Water Resources. Such central enterprises have one thing in common, that is, the debt ratio is extremely high. For China's hydropower, which is about to IPO, the liabilities of total assets of RMB 121.5 billion are as high as 107.8 billion yuan, and the debt ratio is 88.72%, throwing a lot of bad debts. The capital market. The “7.23” car rear-end accident awakened the people with extremely tragic lessons. China can no longer drive investment as the biggest engine of economic growth, especially those with extremely low efficiency and security issues. Data from the China Hydropower Prospectus shows that from 2001 to 2009, the number of employees in China's construction industry increased from 1994 to 30,000 people to 36.72 million, an increase of 84.15%; the total output value of the construction industry increased from 1.5362 trillion yuan to 7.8808 trillion yuan, an increase of 413%; The profit created by the construction industry increased from 29.939 billion yuan to 271.876 billion yuan, an increase of 823.5%. The prospectus stated frankly that more than 60% of the entire society’s annual fixed asset investment is for construction and installation projects. The growth of employees is less than 1 time, the output value has increased by 4 times, the profit has increased by 8 times, and how can project quality and safety performance be guaranteed? How can such investment drive not cause problems?

After many earthquakes in the stock market, most fund managers have reached a consensus to buy as many consumer stocks as possible. However, apart from drinking alcohol and taking medicines, consumer stocks in the A-share market have several high-growth companies? If China's economy is to be transformed, capital markets will have to go first. A-shares can no longer stimulate the economy by inefficient investments.

[Overview of China Hydropower]

This time, China Hydropower plans to issue no more than 3.5 billion shares on the Shanghai Stock Exchange. After the issuance, the total share capital will not exceed 10.1 billion shares and plans to raise 17.316 billion yuan. This is the largest IPO in the A-share market this year.

China Hydropower plans to use 8.834 billion yuan of raised funds for equipment procurement project construction equipment procurement projects. Cambodia Ganhui Hydropower Station BOT project plans to use 604 million yuan, Gansu Jiuquan Qianhekou wind power project plans to use 1 billion yuan, Sichuan Maergei Hydropower Project 5 100 million yuan, Sichuan BC 370 million yuan rapid road project, additional liquidity 6 billion yuan.

From 2008 to 2010, China's hydropower realized operating revenue of 60.795 billion yuan, 75.54 billion yuan and 101.494 billion yuan; net profit attributable to parent company owners was 1.265 billion yuan, 2.289 billion yuan, and 2.911 billion yuan, respectively. In 2010, China's hydropower realized a profit of 0.4365 yuan per share. If it needs to complete the expected 17.316 billion yuan to raise funds, the stock price must be 4.95 yuan, and the issuance price-earnings ratio is 11.33 times.