Event

The political Bureau of the CPC Central Committee held a meeting on July 30, which pointed out that "to stabilize investment in the manufacturing industry, implement projects to make up for deficiencies such as the renovation of old urban neighborhoods, urban parking lots, and the construction of urban and rural cold chain logistics facilities."

Comment

Focus on the Politburo meeting filling board project-- the implementation of the transformation of old urban areas, urban parking lots, urban and rural cold chain logistics facilities, etc.; we focus on elevators (old residential areas with elevators), parking equipment (urban parking), cold chain equipment (urban and rural cold chain logistics).

Renovation of old urban areas: pay attention to the subsidy policy for the installation of elevators, which is expected to increase elevator demand by 2 percentage points, focusing on good results.Shanghai mechanical and electrical、Kangli elevator

(1) 10,000 elevators were installed in the country's old residential areas in 2018, accounting for 1.2% of the elevator demand in 2018. According to the statistics of the Ministry of Housing and Construction on July 1, 2019, more than 10, 000 elevators have been installed in old residential areas across the country in 2018, more than 4000 are under construction, and more than 7000 are going through the preliminary formalities. According to the statistics of the China Elevator Industry Association, China produced 850000 elevators in 2018, an increase of 5 percent over the same period last year; the number of elevators in 2018 was 6.28 million.

(2) the flexibility of installing elevators in old residential areas is affected by the subsidy policy. At present, the subsidy in more than 10 cities across the country is between 500 yuan and 250000 yuan per Taiwan. Shanghai: government subsidies account for 40% of the total project price, with a maximum of no more than 240000 yuan. Guangzhou: subsidy of 50-150000 yuan. Nanjing: the maximum subsidy is 200000.

(3) it is estimated that the installation of elevators in the old residential area in 2019 is expected to increase the elevator demand by about 2%. According to the National Bureau of Statistics, China produced 463000 elevators from January to June 2019, an increase of 18.1% over the same period last year. We assume that the number of elevators installed in the old residential area will increase by 50-100% in 2019, nearly 20, 000 units; according to the growth rate in the first half of the year, we initially expect elevator production to increase by 10% year-on-year to 935000 units in 2019.

(4) the elevator industry benefits from the new demand + replacement demand + installation demand + maintenance demand, the prospect of the industry is good, waiting for the competition pattern to be further improved. Elevator is a big industry, there are American Otis, Finland Kone (2018 income 71.2 billion yuan, net profit 6.6 billion yuan, ROE28%), Switzerland Schindler (2018 income 75.6 billion yuan, net profit 6.6 billion yuan, ROE28%) and other giants. Elevator companies have good cash flow and fierce competition in the domestic market.

(5) key listed companies in China: Shanghai Mechatronics, Kangli Elevator,Guangri shares. Shanghai Mechatronics is the largest listed elevator company in China, with revenue of 21.2 billion yuan in 2018, an increase of 9% over the same period last year, and net profit of 1.27 billion yuan, down 8.8% over the same period last year. Shanghai Mitsubishi Elevator, a subsidiary of the main elevator industry, has an income of 20.1 billion yuan and a net profit of 1.76 billion yuan. Kangli Elevator is the largest national brand elevator enterprise, with an income of 3.1 billion yuan in 2018.

Parking equipment: mechanical three-dimensional parking equipment, city bus three-dimensional garage and other increasing demand, focus onWuyang parking. The number of cars in China continues to grow, the shortage of land restricts the construction of parking lots, and the problem of parking is prominent. Intelligent parking equipment can effectively solve the problem of urban parking. The demand for mechanical three-dimensional parking equipment, city bus three-dimensional garage and other equipment has increased. The competition of middle and low-end mechanical three-dimensional parking equipment is fierce.

Cold chain equipment: the core product is the refrigeration compressor, focusing onDaleng shares、Ice wheel environment. Cold chain logistics consists of four aspects: frozen processing, frozen storage, refrigerated transportation and distribution, and frozen sales. Cold chain equipment includes freezers, freezers and refrigerated vehicles, and the core products are refrigeration compressors. At present, the main cold chain equipment enterprises in China are Daleng shares, ice wheel environment,Sea volume cold chain等。

Investment suggestion

Focus on elevators, parking equipment, cold chain equipment. Short-term thematic investment, whether the industry fundamentals can be further improved still needs to observe the supporting policy support and implementation progress. Focus on Shanghai Mechatronics, Kangli elevators, pay attention to Wuyang parking, Daleng shares, ice wheel environment.

Risk hint

The implementation of elevator subsidy policy is lower than expected, the growth rate of real estate investment is declining, the threshold of parking equipment is lower, and the competition is intensified, and the demand for cold chain logistics is sustained.