[增持评级]INFRASTRUCTURE SECTOR：JAN.-MAR. 2018 URBAN FAI GREW 7.5% YOY 0.2 PPTS LOWER THAN EXPECTED
There are several points worth discussing. First, Jan.-Mar. private FAI growth rate was 8.9%, up 0.8 pptscompared with that in Jan.-Feb. 2018. With the anticipation of accelerated investment in high-end manufacturingand commencement of supporting policies of private capital in investment in 2018, we expect private FAI to stayabove 7% in 2018. Second, overall infrastructure investment growth of 13% was down 3.1 ppts YoY andsubstantially lower than 16.1% growth rate in Jan.-Feb. 2018 was worse than expected. The growth rate offiscal income from land sales of local governments slowed down significantly due to continuousregulation and control of the real estate market. With growth of new loans maintained at a low level andshort-term pressure on infrastructure investment caused by the revamping of PPP projects, growth ofinfrastructure investment in 2018 is expected to remain at a lackluster level at 13%. Third, Jan.-Mar.property development investment growth rate was up 0.5 ppts to 10.4% compared with that of Jan.-Feb. 2018,higher than expected. With continuous strengthening of property market regulation, property developmentinvestment growth remained on a gradual decline trend; we expect property development investment growth rateto decline to 2%-3% in 2018.
Urban FAI growth was slightly worse than expected in Jan.-Mar. 2018. Based on the expectation thatinfrastructure investment growth will remain at a lackluster level, property development investment growth willdecline while growth of manufacturing investment will not substantially increase, overall FAI growth will furtherdecline. We expect urban FAI growth of 6.5%-7.0% in 2018. Even so, we think that individual sub-sectors such asurban rail transit investment and water conservancy and environmental protection investment will maintain fairlyfast growth. Based on a low industry valuation, we reiterate “Outperform” rating for the sector. Maintain“Accumulate” ratings for China Railway Construction （01186 HK）， China Communications ConstructionCompany （01800 HK）， and CRRC Corporation （01766 HK）， and “Buy” rating for China Railway Group（00390 HK） and Zhuzhou CRRC Times Electric （03898 HK）。
□ .G.a.r.y. .W.o.n.g .国.泰.君.安.国.际.控.股.有.限.公.司