Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Focusing on Asian logistics, transportation, and travel companies

Asian Equities Analyst, Logistics & Transport

Asian Frontier Monitor: One Belt New Road - Here Comes America

Thematic (Sector/Industry)

China Industrials / Thematic (Sector/Industry)

This note is intended to be a companion piece to <a href="https://www.smartkarma.com/profiles/1005" target="_blank" data-smartkarma-citation="accounts:1005">Howard J Klein</a>'s new piece, <a href="https://www.smartkarma.com/insights/a-time-traveler-s-guide-to-xi-s-epic-silk-road-project-who-really-benefits" target="_blank" data-smartkarma-citation="insights:9586">A Time Traveler’s Guide to Xi’s Epic Silk Road Project: Who Really Benefits?</a> Howard's piece provides an excellent overview of the long history of China's 'Silk Road' and the modern political exigencies that are behind the potentially massive 'One Belt, One Road' (OBOR) initiative that will expand transport links between China and its neighbors and make possible closer economic connections to trading partners far from North Asia. I strongly suggest readers check out Howard's piece as well as other recent pieces on OBOR issues, such as <a href="https://www.smartkarma.com/insights/seven-ways-to-smooth-your-path-along-the-silk-road" target="_blank" data-smartkarma-citation="insights:9589">Seven Ways to Smooth Your Path Along the Silk Road</a> and <a href="https://www.smartkarma.com/insights/kra-canal-new-update-all-systems-go-maybe-one-belt-one-road-file" target="_blank" data-smartkarma-citation="insights:9607">Kra Canal New Update: All Systems Go, Maybe (One Belt, One Road File)</a>.If Howard's piece is a top-down view of the history and politics that have driven OBOR to date, mine is intended to be a quick bottom-up look at a selection of companies tied to the OBOR theme. In this piece, I list several investable companies that I believe can benefit from the strong growth of OBOR initiatives over the next few years. Specifically, I focus on six companies I feel can derive strong revenue and / or earnings growth from developing intermodal rail connections between inland China cities and their European counterparts. In our view, there are four main ways to invest in the expected strong growth of OBOR in China:<ol><li>Directly, through owners of Chinese transportation links that collectively make up OBOR</li><li>Indirectly, through manufacturers of equipment needed to expand and optimize Chinese OBOR links</li><li>Indirectly, through transportation companies focused on Chinese cities we expect to become OBOR hubs</li><li>Indirectly, through property and infrastructure developers focused on emerging Chinese OBOR hubs</li></ol>Within these four areas we seek companies that feature thematic exposure sufficient to 'move the needle' (in terms of revenues, earnings, or asset values) within a few years. We also examine whether the companies exposed to this theme can successfully navigate the often competing forces of Chinese central government policy initiatives and the need to maximize returns for shareholders. What follows is a quick survey of six publicly traded companies exposed to OBOR growth in China. We describe what they do and how they could benefit from the rapid growth of intermodal rail connections between China and its neighbors to the West and North. At the end of this piece we include an Appendix that features tables summarizing basic financial and share price information for the companies mentioned in the note, plus a map of the main intermodal rail connections to Europe and a chart showing recent growth of intermodal traffic along those corridors.

This note is intended to be a companion piece to Howard J Klein's new piece, A Time Traveler’s Guide to Xi’s Epic Silk Road Project: Who Really Benefits? Howard's piece provides an excellent overview of the long history of China's 'Silk Road' and the modern political exigencies that are behind the potentially massive 'One Belt, One Road' (OBOR) initiative that will expand transport links between China and its neighbors and make possible closer economic connections to trading partners far from North Asia. I strongly suggest readers check out Howard's piece as well as other recent pieces on OBOR issues, such as Seven Ways to Smooth Your Path Along the Silk Road and Kra Canal New Update: All Systems Go, Maybe (One Belt, One Road File).If Howard's piece is a top-down view of the history and politics that have driven OBOR to date, mine is intended to be a quick bottom-up look at a selection of companies tied to the OBOR theme. In this piece, I list several investable companies that I believe can benefit from the strong growth of OBOR initiatives over the next few years. Specifically, I focus on six companies I feel can derive strong revenue and / or earnings growth from developing intermodal rail connections between inland China cities and their European counterparts. In our view, there are four main ways to invest in the expected strong growth of OBOR in China:Directly, through owners of Chinese transportation links that collectively make up OBORIndirectly, through manufacturers of equipment needed to expand and optimize Chinese OBOR linksIndirectly, through transportation companies focused on Chinese cities we expect to become OBOR hubsIndirectly, through property and infrastructure developers focused on emerging Chinese OBOR hubsWithin these four areas we seek companies that feature thematic exposure sufficient to 'move the needle' (in terms of revenues, earnings, or asset values) within a few years. We also examine whether the companies exposed to this theme can successfully navigate the often competing forces of Chinese central government policy initiatives and the need to maximize returns for shareholders. What follows is a quick survey of six publicly traded companies exposed to OBOR growth in China. We describe what they do and how they could benefit from the rapid growth of intermodal rail connections between China and its neighbors to the West and North. At the end of this piece we include an Appendix that features tables summarizing basic financial and share price information for the companies mentioned in the note, plus a map of the main intermodal rail connections to Europe and a chart showing recent growth of intermodal traffic along those corridors.

China Railway Construction Corp (1186 HK)

China Communications Construction (1800 HK)

China Railway Signal & Communication (3969 HK)

Changan Minsheng Apll Logistics (1292 HK)

China International Marine Cntnrs Gp (2039 HK)

Chongqing Changan Automobile Company (200625 CH)

China's New Silk Road Projects: Six 'One Belt, One Road' Investment Ideas