Asian Insights SparX One Belt One Road Infrastructure Sector Refer to important disclosures at the end of this report DBS Group Research . Equity 24 Jul 2017 OBOR: moving faster than expected HSI: 26,706 ANALYST • Our analysis shows that market has yet to price in the potential investment spending from OBOR initiative; total Rachel MIU +852 2863 8843
[email protected] OBOR surged sharply in 2016 and China has a large share Chong Tjen-San, CFA +60 3 26043972 • One of the key growth drivers will be from ASEAN as Chinese contractors expand their presence in the region
[email protected] • CCCC (1800 HK) best for OBOR exposure; CRCC (1186 HK) Chris Leung +852 3668 5694 ** still see mid-term upside potential
[email protected] ** contributed to macro inputs only Implementation of OBOR projects is accelerating; Chinese companies are securing more projects. China is stepping up its project-driven growth model to countries interested in the One Recommendation & valuation Belt, One Road (OBOR) initiative. The OBOR strategy could pave Company Price Target Recom Mkt FY18F the way for much higher investments in the future, and provide Price Cap PE enormous opportunity for the Chinese contractors. They are Local$ Local$ US$m x participating in several large-scale infrastructure projects in six major regions, with huge interests in the China-Pakistan Economic Infrastructure construction Corridor (CPEC) development. The Chinese contractors are now CCC-H (1800 HK) HK$ 10.88 12.90 BUY 36,292 7.1 targeting at ASEAN, the next up and coming region. We estimate CCC-A (601800 CH) RMB 17.31 18.10 HOLD 36,292 13.0 the transport related investment could be much higher than the CRCC-H (1186 HK) HK$ 10.80 12.90 BUY 25,587 7.3 initial phase, exceeding US$200 billion over a 5-year period in CRCC-A (601186 CH) RMB 13.33 12.50 HOLD 25,587 10.5 ASEAN.