中国城市化2.0：新基建机会手册

1、MMChinas Urbanization 2.0TNew Infrastructure Opportunities Handbookhe new infrastructure push affirms our view that smart supercity buildup a key enabler of Chinas Urbanization 2.0 is fast-tracked. We expect capex in six key segments to reach US$180bn p.a. in 2020-30, almost 2x the past three-yearav

2、erage, benefiting key players.Why now? China is eyeing new infrastructure projects to mitigate the economic impact of COVID-19 and tackle its big city problems. This effort includes 5G base stations, Industrial Internet of Things (IIoT), artificial intelligence and data centers, ultra high voltage,

3、inter- city high-speed railways and rail transit, and electrical vehicle charging stations. Its part of countercyclical measures to offset the near-term growth shock but it could also fast-track smart super- cities, which leverage next-generation technologies to boost long- term productivity and mak

4、e cities faster and more livable. See The Rise of Chinas Supercities: New Era of Urbanization, October 10, 2019.What is the scope of investment? Our bottom-up estimates sug- gest that the annual average investment in new infrastructure would reach US$180bn in 2020-30, almost 2x the average over the

5、past three years, led by AI and data centers, intercity HSR and rail transit, and 5G base stations. Meanwhile, the average share of private capex in new infrastructure could also pick up to 38% in the next decade (vs. 28% in 2017-19), with more private participation in IIoT and railways.Potential po

6、licy catalysts to watch for:Tax: This could include tax incentives for IIoT adoption and related R&D, and cuts in electricity charges for heavy power- intensive 5G base stations, data centers, and EV charging operators.Financing: We could see more issuance of local government special bonds to suppor

7、t railway construction, and continued market-oriented reforms to increase the attractiveness of new infrastructure projects to private investors.Regulation: Possible measures include smoother project approval processes, less pricing restriction for 5G services, and more carbon quotas for data center

8、s in Tier-1 cities.Three things are needed to manage the risk of overleveraging and overcapacity:Manageable size: We estimate that the annual investment in new infrastructure in 2020-30 is equivalent to 8% of Chinas total annual infrastructure FAI in the past five years and 20% of incre- mental infr

9、astructure credit in 2019.More transparent funding: This would entail higher private sector participation and more local government special bond financing.Higher asset quality: Railway construction would focus more on HSR in eastern China and city-suburb connectivity in city clusters. We envisage mo

10、re investment in digital infrastructure, for which there is high demand in smart supercity development.The new infrastructure push has increased our conviction in Chinas three-stage Urbanization 2.0 investment playbook: 1) From a consumer to industrial Internet; 2) digitalization of old- economy ind

11、ustries; 3) new lifestyles in smart supercities.We highlight 22 companies as immediate beneficiaries of this theme: Our selection is based on exposure to segments geared for high growth potential and/or leadership status compared to peers.Contents5Summary Tables7New Infrastructure in Focus12Segment

12、DetailsSummary TablesExhibit 1:AI and Data Centers, Intercity HSR and Rail Transit, and 5G BTS to Lead the New Infrastructure Investment in 2020-30Annual Average Investment by Segments, USD BnAI & DAaI &taDaCtaeCnetnetrers41Intercity HSR &IntercRityaHiSl RTr&aRnasiliTtransit23465G Bas5Ge BSatsaetSio

13、tantion1235IndustriInadluIsotrTial IoT1427UHVUHV1082017-192020-30EEV ChargingESVtCahtiaorgninsg Station1557Source: Company Data, Morgan Stanley Research estimates0102030405060Exhibit 2:Summary of New Infrastructure InvestmentSegments2017-19Overall Private (USD Bn) Share(%)2020-2030EOverall Private (

14、USD Bn) Share(%)Potential Policy Catalyst to Watch forRisk of Overcapacity5G Base Station Infrastructure (Gary Yu)120%350%Relaxation of policy restrictions on Speed Upgrade & Tariff ReductionA cut in electricity fees, as 5G BTS tend to consume more power than 4GMore local government provision of exi

15、sting public buildings for 5G BTS deploymentLow- 5G adoption is faster than early 4G cycle after four months of service launchIndustrial IoT(Sharon Shih)1430%2760%- More tax incentives and R&D subsidies to boost incremental upfront investmentLow- High customization neededArtificial Intelligence & Da

16、ta Centers (Yang Liu)4144%5744%More carbon quota for data centers in tier-1 citiesLower electricity tariffPolicy support for further market consolidationLow- Strong demand and previous tight supplyUltra-high Voltage (UHV)(Eva Hou)100%80%- Smoother approval process by National Energy AdministrationHi

17、gh- Most of the UHVs in operation are under- utilizedIntercity HSR & Rail Transit(Kevin Luo)2325%4650%More smooth approval process by NDRCMore policy support to broaden funding channels and attract private investmentLow- Railway investment to focus more on HSR in eastern China and city-suburb connec

18、tivity in city clustersEV Charging Stations(Eva Hou, Jack Yeung)176%575%- A cut in tariffs charged to EV charging operatorsMedium- Market may start to consolidate in case ofovercapacity, given the segment is mainly funded by private sectorTotal New Infrastructure10028%17738%More support needed on ta

19、x, financing, and regulationLowSource: Company Data, Morgan Stanley Research estimatesSummary of key stock beneficiaries and rationale by investment themesSource: Morgan Stanley Research.New Infrastructure in FocusWhat is new infrastructure?Chinas policymakers have been mulling support for new infra

20、struc- ture in recent meetings after calling for more support for 5G and industrial Internet during the Politburo meeting on February 21, the top leadership reiterated the importance of accelerating investment in 5G and data centers during the next Politburo meeting on March 4.According to official

21、definition, new infrastructure includes 5G base station infrastructure, industrial IoT (Internet of Things), AI (Artificial Intelligence) and data centers, UHV (Ultra High Voltage), intercity HSR (High-Speed Railways) and rail transit, and EV (Electric Vehicle) charging stations.Why now?Boost to new

22、 infrastructure would be part of countercyclical easing to mitigate COVID-19 disruption in the near term. In our base case, Chinas GDP growth is likely to drop to -5% YoY in 1Q20 before a 2Q20 rebound into expansion territory, reaching 4% in full- year 2020. We cite the large-scale suspension of pro

23、duction suspen- sion in February resulting from the COVID-19 outbreak, the slow pace of business resumption in March, and weaker external demand amid the developing global recession (See Seismic Waves of Covid-19 to Trigger a Global Recession, March 17, 2020)Beijing has signaled tolerance for lower

24、growth and will probably push the deadline of doubling 2010 GDP out a quarter, to 1Q21. Even so, we still see a meaningful stimulus package to ensure labour market stability and facilitate an above-trend recovery in 2H20, with cyclically adjusted primary augmented fiscal deficit to widen by 230bp of

25、 GDP in 2020. We expect half of this stimulus to go into infrastructure investment, particularly the new infrastructure proj- ects, as recent Politburo meetings suggested.and sustain Chinas productivity growth over the medium term: The policy support for new infrastructure is in line with our view t

26、hat policymakers are shifting urbanization strategy from boosting physical infrastructure (roads, railways, and highways) in an even-handed manner (such as Western Development since 2000) to promoting smart supercities.More emphasis will be put on boosting digital infrastructure, clean energy, and i

27、nterconnectivity of key city clusters. This will make cities faster, safer, greener, and more livable, helping address big-city prob- lems (which have been a key impediment to further urbanization in the old growth model) and enhancing cities capacity to accommo- date more population forging a new p

28、hase of urbanization toward 2030 (See The Rise of Chinas Supercities: New Era of Urbanization, October 10, 2019).In particular, the COVID-19 outbreak has reminded us of the impor- tance of enhancing efficiency in allocating social resources and keeping population density in cities at a proper level.

29、 This could be achieved with the adoption of next-gen technologies (5G, AI, and big data analysis) and more developed intercity and intracity transporta- tion networks. For instance:The buildup of cloud hospitals and an integrated public healthcare database could match healthcare resources with pati

30、ents better, reducing the unnecessary waiting time in hospitals.Development of more interactive online courses could break the geographic constraints on high-quality education resources.Shorter intercity and intracity commuting times thanks to high- speed commuter trains, smart traffic control syste

31、ms, shared mobility, and automated vehicle technologies would encourage people to live in suburban and satellite cities rather than city cen- ters.Exhibit 4:Boost to New Infrastructure to Help Tackle Key Hurdles to Further UrbanizationSource: Morgan Stanley ResearchExpecting annual capex to double,

32、with higher private participationOur industry analysts estimate that the average annual investment for new infrastructure could reach US$177bn in 2020-30, almost twice the past three years annual average (US$100bn in 2017-19). This will be led by more capex investment in AI and data centers, interci

33、ty HSR and rail transit, and 5G base stations (see Exhibit 5 ).Meanwhile, we expect that the average share of private investment will also pick up to 38% over the next decade (vs. 28% in 2017-19). We expect doubling in the private share in two areas ( Exhibit 6 ):Industrial IoT (60% in 2020-30 vs. 3

34、0% in 2017-19)Intercity HSR and rail transit (50% in 2020-30 vs. 25% in 2017-19)In contrast, our industry analysts expect SOEs to continue to domi- nate investment in 5G base stations and UHV.Exhibit 5:AI and Data Centers, Intercity HSR and Rail Transit, and 5G BTS to Lead the New Infrastructure Inv

35、estment in 2020-30Annual Average Investment by Sector, USD BnPotential policy catalysts to watch forIn our view, more policy support on the three fronts below would be positive catalysts for new infrastructure development:Tax: This could include tax incentives for industrial IoT adoption and related

36、 R&D, and cuts in electricity charges for heavy power- intensive 5G base stations, data centers, and EV charging opera- tors.Financing: This would entail more issuance of local government special bonds to support construction of HSR and railway transit, and continued market-oriented reforms to incre

37、ase the attractive- ness of new infrastructure to private investors.Regulation: Possible measures include smoother project approval processes (particularly for the UHV and railway con- struction segments), less pricing restriction for 5G services, and more carbon quotas for data centers in tier-1 ci

38、ties.The NDRCs approval is most significant. Also, we think the policy should broaden financing methods and improve returns on invest- ment to encourage the private sector to participate in intercity HSR and rail transit investment.AI & Data Centers Intercity HSR & Rail Transit5G Base Station Indust

39、rial IoTUHVEV Charging Station57How to manage the risk of overleveraging and overcapacity23461235142710812017-192020-30E541A key market concern is whether a strong government boost to new infrastructure could lead to a repeat of the debt-disinflation cycle, as seen in 2012-16. In our view, three fac

40、tors are needed to manage the such risk:0102030405060Source: Company Data, Morgan Stanley Research estimatesExhibit 6:Expecting More Private Participation in Industrial IoT and Intercity HSR and Rail TransitEV Charging Station76%75%Industrial IoT30%60%Intercity HSR & Rail Transit25%50%AI & Data Cent

41、ers44%44%UHV0%0%5G Base Station0%0%2017-192020-30EShare of Private Sector in Investment0% 10% 20% 30% 40% 50% 60% 70% 80%Source: Company Data, Morgan Stanley Research estimatesModest scope of investment: As mentioned previously, our bottom-up estimates suggest that the average size of invest- ment n

42、eeded for new infrastructure will be less than US$200bn p.a. in 2020-30. Thats roughly 8% of Chinas annual infrastructure FAI in the past five years and 20% of incremental infrastructure credit in 2019.More transparent funding channels: Policymakers have endeavored to improve the transparency of gov

43、ernment financing for infrastructure over the past three years, by grad- ually replacing local government financing vehicle (LGFV) loans and shadow bank financing with local government bond issuance. Meanwhile, higher private sector participation in new infrastructure (we expect 38% in 2020-30 vs. 2

44、8% in 2017-19) would help increase equity and corporate bond financing.Better asset quality: Our Industrials team for China believes that new railway investment will focus more on HSR in eastern China and city-suburb connectivity in city clusters, which could generate stronger investment returns.Exh

45、ibit 7:Chinas Productivity Growth Rate to Remain One of the Highest in the World in 2020-30Total Factor Productivity CAGR(during 2006-18 unless otherwise specified)Meanwhile, more investment in digital infrastructure is a good sign. We see strong demand from the continued development of smart superc

46、ities. In particular, we see faster 5G adoption relative to the early 4G cycle after four months of service launch, high demand for buildup of data centers given tight supply previously, and require- ment of high customization in industrial IoT.China KoreaChina (2020-30E)Germany JapanUnited StatesAu

47、stralia Canada FranceUnited Kingdom-0.02%0.5%0.5%0.4%0.4%0.3%0.1%1.5%2.1%3.3%We also believe the risk of overcapacity in EV charging stations is manageable, since the segment is mainly funded by the private sector. This means that market consolidation could take place should utilization drop.On the

48、other hand, a risk that bears watching is overinvestment in UHV, since that segment is led by SOEs, and most of the UHVs cur- rently in operation are underutilized.Maintaining our view of Chinas Urbanization 2.0 pathDespite the near-term growth setback from the COVID-19 disrup- tion, which we view a

49、s transitory, we believe Chinas continued devel- opment of smart supercities via new infrastructure will bring its urbanization ratio to 75% by 2030 (vs. 60% today), translating into 220mn new urban dwellers.The adoption of next-gen technology and increased urban agglomer- ation effects will sustain

50、 total factor productivity at a 1.5% CAGR through 2030 (vs. 2.0% in 2015-19) still ranking as one of the highest rates in the world and labor productivity could increase 80% from todays level. Our growth accounting analysis suggests that 55% of the labor productivity increase will come from the aggl

51、omeration effect of smart supercities, with another 40% attrib- utable to rural-urban migration.We thus remain confident that China is poised to attain high-income status by 2025, with annual per capita income almost doubling from US$10k today over the next decade.0%0%1%1%2%2%3%3%4%Source: OECD, NBS

52、, Haver, Morgan Stanley Research estimatesExhibit 8:Chinas Long-term Growth ModelReal GDP GrowthCapital InputLabor InputTFPGrowthGNI Per Capita (USD, eop)2011-20157.9%5.6%0.2%2.2%7,8852016-2020E6.1%4.4%-0.1%1.7%10,3752021-2025E5.4%3.4%0.0%2.0%14,2972026-2030E3.5%2.5%-0.2%1.2%17,852Source: NBS, Morga

53、n Stanley Research estimatesWhich companies could benefit the most?New infrastructure a prominent catalyst for Chinas Urbanization 2.0 brings investment opportunities: In Morgan Stanleys blue paper The Rise of Chinas Supercities: New Era of Urbanization, we highlighted three themes for investors to

54、capitalize on this megatrend, namely:From a consumer to industrial Internet;Digitalization of old-economy industries;New lifestyles in smart supercities.New infrastructure provides an important channel to play these investment themes the associated investments will be critical in enabling and facili

55、tating the wave of Urbanization 2.0.We highlight 22 companies as immediate beneficiaries of this theme: This is because they have direct and sizable exposure to the key growth areas discussed above, and have already established leadership status compared to peers. Here are the companies and why they

56、 cater to the new infrastructure theme:5G networks:User subscriptions: China MobileCapex investment: China Tower, ZTENetwork equipment/installation/maintenance: ZTE, CCSIndustrial IoT automation, cloud computing, software solutions, network securities, etc.:Platform providers: Foxconn, Yonyou, BONC,

57、 AlibabaHardware/equipment: Advantech, Ennoconn, HIKVision;Data centers operators, infrastructure, servers and network equip- ment:Data center vendors: GDS, VNET, and Beijing SinnetHardware/servers: Wiwynn, Quanta, and Foxconn Industrial InternetUHV (Ultra-high-voltage electricity transmission):UHV

58、equipment: NARI Technology and Pinggao ElectricIntercity HSR and rail transit:Railway equipment manufacturer: Times Electric, CRRC CorpRailway construction: China Railway Group, China Railway ConstructionEV charging stations:Infrastructure, operation: XJ ElectricSegment Details5G Base Station Infras

59、tructureGary Yu, Sara WangWhats the expected scope of investment, and who will pay for it?Operators launched 5G at an entry Average Revenue Per User (ARPU) of Rmb90 at end-October 2019. As of February 2020, CM has 15.4mn 5G subscribers and monthly 5G net adds accelerated from 4.2mn in January to 8.7

60、mn in February. CM showed a 6.5% ARPU lift for early 5G adopters and expects the lift to broaden in 2020, which supports our view of a 10% ARPU lift. We assume 5G-induced lift in ARPU will drive a 3% CAGR for industry mobile services rev- enue in 2019-22. For China Mobile, we expect its earnings to