Transportation: land use tax preferential policies for the logistics industry can be expected

In 2012, the logistics industry focuses on “adjusting structure and pushing policies”, and land use tax preferential policies can be expected. 1) In 2011, the growth of the logistics industry slowed down and the structural adjustment accelerated. The increase in value added in the logistics industry is faster than the total amount of logistics. It is estimated that the total amount of social logistics in 2011 will be 160 trillion yuan, and that of the logistics industry will be 3 trillion yuan, which is an increase of 12% and 14% respectively. In 2012, the growth rate of total social logistics and added value of the logistics industry is expected to be around 11% and 13%. 2) 2012 is the year when the logistics industry policy is implemented. It is expected that the direction of the implementation of the logistics policy in the future will be the tax reduction of logistics companies and the implementation of specific policies (land use tax, business tax to VAT, and differential taxation policy). 3) In the near future, we can expect the introduction of land tax and other preferential tax policies. Our analysis predicts that logistics companies can levy land use tax according to the differential tax rates in various regions after certain conditions are met. The change of business tax to VAT may also expand the scope of pilot projects and include new industries.

Highway and railway logistics: Maintaining the "neutral" highway and "look" rating on railway logistics, continue to recommend Shandong Expressway (600350), Guangzhou-Shenzhen Railway (601333), Tielong Logistics (600125), Jianfa (600153) and China National Depository (600787). 1) It is expected that the highway key companies' annual net profit growth in 2011 will reach 7%. The speeds of Shenzhen Expressway and Shandong Expressway will increase by 23% and 16% respectively. The growth rate of other companies will be less than 5%, and the Ganyue Expressway may experience negative growth. 2) It is expected that the annual growth rate of key companies in the railway industry will reach 16%, and the price increase of Guangzhou-Shenzhen Railway due to intercity trains will increase by 25%. The profit forecast of Daqin Railway and Tielong Logistics will be slightly lowered, mainly due to the increase in cost. Exceed expectations and delay settlement of real estate. 3) It is expected that the 2011 key annual growth rate of net profit for logistics key companies will reach 31%, mainly due to the increase in warehousing prices, the expansion of extended logistics services, and investment income from the sale of equity and triangular arbitrage. We judge 2011 as the "year of logistics planning" and 2012 will be the "year of logistics policy implementation." In the future, the country may introduce specific support policies such as reducing the land use tax for land use by logistics companies, park logistics planning, and encouraging mergers and acquisitions of logistics companies.

Aviation Airports: China Eastern Airlines’ domestic load factor also declined in December and should not be superstitious for the Spring Festival effect. (1) China Eastern Airlines announced its operational data for December this week, which is strikingly similar to last week’s Air China and China Southern Airlines. The domestic airline load factor also saw a year-on-year decline of 1.5%, with RPK and ASK growth rates of 4.4% and 6.6% respectively. The accelerated release of transport capacity and increased competition are the main reasons for the decline in passenger load. (2) The stock price of airline stocks this week remained good, second only to shipping; we judged that these two cyclical sub-sectors were mainly due to oversold bounces caused by market volatility; from a fundamental perspective, the current boom in aviation was at a high level. In 2012, the passenger load factor and fares have a risk of decline, and they do not support the upward trend of the major trend. In addition, due to the low oil prices in the same period of last year, the aviation industry's performance in the first quarter of 2011 will face declines. (3) From the data of the past 11 years, the aviation industry has achieved positive excess returns only during the first 10 days of the Spring Festival of the 6 years and the 10 days of the Spring Festival of the 3 years. Therefore, we believe that aviation is not inevitable before and after the holiday season. With seasonal rise opportunities, investors need to be cautious.

The shipping industry continued to “nirvana” and waited for the turning point of performance. The performance in the fourth quarter accelerated; the port’s main business remained stable. Maintaining a "neutral" rating for the shipping port industry and relatively optimistic about the "critical organic" of the dry bulk sector, we recommend focusing on China COSCO and COSCO Shipping and recommending Tangshan Port. (1) In the near future, BDI is a change and abnormal state, which is mainly affected by the combination of abnormal weather and seasonal factors. Non-industry fundamental factors in the shipping sector can be explained and it is recommended to be cautious. (2) The shipping industry's fourth-quarter performance accelerated. It is expected that the entire industry will realize a net loss of 9.44 billion yuan in 2011, a year-on-year decrease of 168%; in the fourth quarter, the industry’s total loss will be 3.46 billion yuan, which will accelerate its decline. The key companies in the fourth quarter decreased by 261% year-on-year and decreased by 173% year-on-year. (3) It is estimated that the net profit of the port industry in 2011 will be 12.52 billion yuan, up 4% year-on-year; the net profit in the fourth quarter will be 2.94 billion yuan, which is the first year-on-year drop in the year. The key companies realized a net profit of 8.28 billion yuan, and achieved a net profit of 1.83 billion yuan in the fourth quarter. The performance decline rate (-21%) was faster than the industry average of -8%, which was mainly due to the high number of accidents in Dalian Port in 2011 and the influence of Shanghai Port Group.