The China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) jointly released the circular on advancing assets securitization of PPP programs in traditional infrastructure on Dec. 26. It set the range and criteria on PPP programs to conduct assets securitization. It will actively promote strict approval, review and filing procedures and the approval procedures on the review of plans. It requires signing standard and effective contracts on PPP programs and ensure the quality meeting relevant criteria. PPP programs in traditional infrastructure established and operated for over two years with reasonable investment return mechanism, sustainable and stable cash flow, stable credit of original originators and sustainability can conduct assets securitization. In addition, 1,033 programs with a total estimated investment of 990.9 billion yuan in Shandong (excluding Qingdao) have been reserved and adopted in the national PPP comprehensive information platform, ranking second in China, by the end of September, indicated Li Xuechun, an official from Shandong Province Finance Bureau, at a forum on PPP programs in Yuncheng County, Heze City, Shandong Province.
As a result, the PPP concept outperformed yesterday with an increase of 1.89 percent. China Communications Construction Company Limited (01800.HK; 601800.SH) and Chongqing Yukaifa Co., Ltd. (000514.SZ) surged 7.93 percent and 7.9 percent. Safbon Water Service (Holding) Inc., Shanghai (300262.SZ), Jiangsu Bicon Pharmaceutical Listed Company (002411.SZ), Focused Photonics (Hangzhou), Inc. (300203.SZ), Zhongzhu Healthcare Holding Co., Ltd. (600568.SH), China State Construction Engineering Corporation Limited (601668.SH), Guangxi Bossco Environmental Protection Technology Co., Ltd. (300422.SZ) and Chengdu Techcent Environment Co., Ltd. (300362.SZ) jumped by over 3 percent.
The PPP sector attracted a total of 564 million yuan yesterday. 17 individual stocks recorded a net inflow of over 10 million yuan. Yukaifa, China Communications Construction and China State Construction Engineering recorded a net inflow of 375,157,800 yuan, 155,765,100 yuan and 108,551,900 yuan, respectively. China Gezhouba Group Company Limited (600068.SH), Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ), China Railway Construction Corporation Limited (01186.HK; 601186.SH), Zhongzhu Healthcare Holding Co., Ltd. (600568.SH), China Railway Group Limited (00390.HK; 601390.SH), Jiangsu Bicon Pharmaceutical Listed Company (002411.SZ) and Safbon Water Service (Holding) Inc., Shanghai (300262.SZ) recorded an inflow of 86,372,400 yuan, 75,251,100 yuan, 69,270,600 yuan, 44,489,900 yuan, 37,422,900 yuan, 32,838,100 yuan and 23,144,500 yuan, respectively. The above ten leaders attracted a total of 1,008 million yuan.
It is noteworthy that according to statistics made by the Securities Daily market research center based on data from Hithink RoyalFlush Information Network, as of the end of the third quarter, social security funds altogether hold 39 PPP-concept stocks. In the first three quarters of this year, social security funds hold 26 PPP-concept stocks, accounting for two thirds of the total number it holds at the end of the third quarter. They have increased holdings in China CAMC Engineering Co., Ltd. (002051.SZ), Xiamen Savings Environmental Co., Ltd. (300056.SZ), Shanghai Tunnel Engineering Co., Ltd. (600820.SH) and China Gezhouba Group Company Limited (600068.SH) for three consecutive quarters.
Analysts point out that based on the latest fourth quarterly reports released by the China Public Private Partnerships Center, compared to the end of June, the proportion of the first batch of demonstration projects which are now in the process of implementation remained unchanged in the 4th quarter; while that of the second batch of demonstration projects has grown. On Oct. 13, the Ministry of Finance and other departments jointly released a circular to promote the construction of PPP demonstration projects. The circular includes 516 projects into the third batch of PPP demonstration projects, with a total investment of 1,170.8 billion yuan. In the medium to long term, PPP-concept stocks will post more opportunities than risks. Social security funds that have made investment in PPP-concept stocks are likely to continue to benefit.
Translated by Star Zhang, Coral Zhong
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