What happened?, Vice President of the "First High Speed Rail Stock" is under investigation! Appointment is less than 8 months old

On the evening of September 5th, the Beijing Shanghai high-speed railway announced that the company received a "detention notice" from the Shanxi Provincial Supervision Commission on September 2nd. Wang Yong, the deputy general manager of the company, was detained for suspected serious violations of discipline and law. It has been less than 8 months since Wang Yong was appointed as the deputy general manager of the Beijing Shanghai high-speed railway on January 12th.

According to the resume, Wang Yong's past work experience includes positions such as member of the Party Committee, director, and deputy general manager of China Railway Beijing Group Co., Ltd. On September 4th, the day before Wang Yong was announced for investigation, according to the Central Commission for Discipline Inspection, Yang Xucheng, member of the Party Committee and deputy general manager of China Railway Beijing Group Co., Ltd., was investigated for serious violations of discipline and law.

In terms of the secondary market, as an individual stock with the dual concepts of "state-owned enterprise reform" and "medium to high valuation", the Beijing Shanghai high-speed railway received an increase in holdings from multiple public funds in the first half of the year. In addition to passive increases from index funds, the funds that favored this stock were mostly dividend funds or pension FOF products with lower risk preferences, as well as bond funds.

Deputy General Manager is under investigation

On September 5th, the "first stock of China's high-speed rail", the Beijing Shanghai high-speed rail, announced that the company received a "detention notice" from the Shanxi Provincial Supervision Commission on September 2nd, 2023. Wang Yong, the deputy general manager of the company, was detained on suspicion of serious violations of discipline and law.

The announcement states that as of the disclosure date of this announcement, the directors, supervisors, and other senior management personnel of the company have been performing their duties normally, the board of directors of the company is operating in accordance with the law, and the production and operation of the company are normal. This matter will not have an impact on the normal production and operation of the company.

According to Wang Yong's resume, he was born in November 1976 and is a member of the Communist Party of China. He holds a Master's degree in Engineering and is a Senior Engineer. Formerly served as the Acting Director and Director of the Beijing Station Office of the Beijing Branch of the Beijing Railway Bureau, Acting Deputy Station Master and Deputy Station Master of the Beijing Station of the Beijing Railway Bureau, Station Master and Deputy Party Secretary of the Beijing South Station of the Beijing Railway Bureau, Station Master and Deputy Party Secretary of the Beijing Station of the Beijing Railway Bureau, Deputy Director of the Beijing Railway Bureau, and Party Committee Member, Director, and Deputy General Manager of China Railway Beijing Group Co., Ltd.

At the company's board meeting in January this year, it was agreed to appoint Wang Yong as the deputy general manager, which has been less than 8 months since then.

It is worth mentioning that on September 4th, the day before Wang Yong was announced for investigation, according to the disciplinary inspection and supervision team of the Central Commission for Discipline Inspection and the National Supervision Commission stationed at China Railway Group Co., Ltd. and the Tianjin Municipal Commission for Discipline Inspection and Supervision, Yang Xucheng, a member of the Party Committee and Deputy General Manager of China Railway Beijing Group Co., Ltd., was suspected of serious violations of discipline and law.

"Travel fever" and hot passenger transportation performance

In the just concluded summer vacation, the bustling travel trend witnessed a strong recovery in the passenger transportation sector. Relevant data shows that the national railway passenger volume during the summer transportation period increased by about 13.0% compared to the same period in 2019, setting a new historical high in summer transportation passenger volume. July and August increased by 15.0% and 11.1% respectively compared to the same period in 2019.

According to the recently disclosed semi annual reports, the performance of the Beijing Shanghai Railway, Daqin Railway, and Guangzhou Shenzhen Railway all improved in the first half of the year, and the profitability of the aviation sector also improved rapidly. Among them, after deducting exchange gains and losses in the second quarter of 2023, Air China, Southern Airlines, Chunqiu, and Jixiang all achieved profitability.

Among them, the Beijing Shanghai high-speed railway is the largest asset scale and longest operating high-speed railway company in China. The Beijing Shanghai high-speed railway connects the two major economic zones of "Beijing Tianjin Hebei" and "Yangtze River Delta", with fast regional economic growth, high population density, high urbanization level, and a good passenger flow foundation.

The company is the investment, construction, and operation entity of the Beijing Shanghai high-speed railway and stations along the line. Through the entrusted transportation management model, it entrusts the Beijing Bureau Group, Jinan Bureau Group, and Shanghai Bureau Group along the Beijing Shanghai high-speed railway to manage the transportation of the railway, and entrusts the traction power supply and power facility operation and maintenance to China Railway Electrification Bureau Group.

In the first half of the year, the Beijing Shanghai high-speed railway achieved a revenue of 19.279 billion yuan, an increase of 143.19% year-on-year; The net profit attributable to shareholders of the listed company was 5.136 billion yuan, compared to a loss of 1.028 billion yuan in the same period last year; The net cash flow generated from operating activities was 9.444 billion yuan, a year-on-year increase of 880.94%. In the first half of the year, trains on the Beijing Shanghai high-speed railway transported 24.99 million passengers, an increase of 299.7% compared to the same period last year, reaching 99.7% of the same period in 2019; The operating mileage of cross line trains has reached 44.939 million kilometers, an increase of 97.4% from the same period last year and 116.2% from the same period in 2019. From financial data, revenue and net profit have reached new historical highs since going public in 2020, and half year performance has returned to pre pandemic levels.

Guohai Securities believes that the Beijing Shanghai high-speed railway network has high-quality lines and there is room for improvement in both quantity and price. In the short term, the demand for railway travel is rapidly recovering, coupled with the opening of ticket price elasticity, and the volume and price of summer transportation will increase in the third quarter. In the medium to long term, as one of the core assets of China's high-speed rail, the Beijing Shanghai high-speed rail will enjoy location advantages and the dividend of China's high-speed rail demand in the long term, and will have abundant long-term development momentum.

Increased holdings by multiple public offerings in the second quarter

On September 1st, the MSCI China A50 Connectivity Index experienced a quarterly adjustment. In this adjustment, two large market cap leading stocks have been added, namely Industrial Fulian and Beijing Shanghai High Speed Railway.

As of the close on September 5th, the Beijing Shanghai High Speed Rail closed at 5.15 yuan per share, a decrease of 0.77%, with a market value of 252.9 billion yuan. From a historical perspective, the stock price of the Beijing Shanghai High Speed Rail has remained relatively stable, with the stock price hovering in the range of 4 yuan to 6 yuan for a long time, except for a slight increase to 8 yuan after going public.

As an individual stock with the dual concepts of "state-owned enterprise reform" and "central special evaluation", the Beijing Shanghai high-speed railway received an increase in holdings from multiple public funds in the first half of the year. As of the end of the second quarter, the shareholding ratio of public funds was about 2.14%. In the second quarter, Huaxia Fund increased its holdings by 47.65 million shares, while Zheshang Fund, Jiashi Fund, and others also increased their holdings by over 30 million shares. From the allocation situation, in addition to the passive increase of index funds, the funds that favor this stock are mostly dividend funds or pension FOF products with lower risk preferences. Wind data shows that as of the end of the second quarter, E Fund has a total of 56 products allocated this stock, and Yufu Bond Fund will buy it into the second largest holding stock; Huaxia Fund also has 29 products with configurations, such as Huaxia Dividend Hybrid Fund and Huaxia Pension 2045 Three Year Fund, all of which have holdings.

In addition, in the second quarter, Wang Keyu, Cao Zhaoxu, and other star fund managers of Hongde Fund also newly acquired stocks of the Beijing Shanghai high-speed rail and bought them into the top ten "hidden heavy holdings". Wang Keyu stated in the fund's second quarter report that "he will continue to explore investment targets with suitable cost-effectiveness in the stable development of infrastructure, and improve the volatility characteristics of the portfolio."