Railway investment is expected to pick up in 2018, and there will be considerable new demand for railway equipment such as locomotives and freight cars from 2018 to 2020. According to a report by China Business Network on August 7, people from China Railway Corporation believe that under the dual stimulation of the growth of railway locomotive and vehicle investment and the accelerated infrastructure construction boom, the railway fixed asset investment in 2018 is expected to return to more than 800 billion yuan. Since the beginning of this year, documents such as the "Three-Year Action Plan to Win the Blue Sky Defense Battle" have clearly stated the importance of promoting the "road to rail" process. It is imperative to improve railway freight transportation capacity. We believe that increasing the purchase of locomotives and freight cars is one of the important ways to achieve the improvement of railway freight capacity. From 2018 to 2020, there will be considerable new demand for railway equipment, and railway equipment manufacturers are expected to benefit.

Benefiting from the growth of railway equipment investment and the advancement of infrastructure construction, railway investment in 2018 may exceed 800 billion yuan. The national railway fixed asset investment consists of locomotive and vehicle investment (equipment investment) and capital construction investment. This data is an important basis for measuring the completion of the annual railway construction tasks. According to data from the National Railway Administration, the national railway fixed asset investment exceeded 800 billion yuan from 2014 to 2017, reaching 808.8 billion yuan, 823.8 billion yuan, 801.5 billion yuan and 801 billion yuan respectively. According to a report by China Business Network on August 7, China's railway fixed asset investment in 2018 was originally planned to reach 732 billion yuan. People from China Railway Corporation believe that under the dual stimulation of the growth of railway locomotive and vehicle investment and the accelerated infrastructure construction boom, the railway fixed asset investment in 2018 is expected to return to more than 800 billion yuan.

The “battle to protect blue skies” has begun, and increasing railway freight traffic is expected to become one of the important tasks of the China Railway Corporation. On June 27, the State Council issued the "Three-Year Action Plan to Win the Blue Sky Defense Battle", which clearly defined the goal of significantly increasing the proportion of railway freight: by 2020, the national railway freight volume will increase by 30% compared with 2017 (that is, from 3.69 billion tons to 4.79 billion tons, an increase of 1.1 billion tons in three years). We believe that expanding the scope of operation of 10,000-ton heavy-load trains, tapping the potential of existing channels, and strengthening the support of locomotive and vehicle equipment are expected to become important measures to enhance domestic railway transportation capabilities. Railway freight capacity is entering a stage of steady improvement, and the railway freight volume increase action is expected to become one of the important tasks of the China Railway Corporation from 2018 to 2020.

Railway investment is expected to recover, freight volume growth is steadily advancing, and railway equipment procurement is facing opportunities. According to data from China Railway Construction Investment, as of August 7, the scale of railway equipment that has been tendered in 2018 includes 145 standard EMU trains, 428 locomotives, 33,000 freight cars, and 263 passenger cars. The purchase of locomotives and freight cars is an important way to improve the transport capacity. According to the goal of the railway freight growth action from 2018 to 2020, we estimate that the scale of freight car procurement in 2018-2020 is expected to reach 41,000, 74,000 and 92,000 respectively, and the scale of locomotive procurement is expected to reach 687, 1,226 and 1,536 respectively. There will be considerable new demand for railway equipment such as locomotives and freight cars from 2018 to 2020.

(Originally published in "Sina Finance" on August 9, 2018, the original title "Dynamic Comments on railway equipment industry: Railway investment is expected to pick up, railway equipment to meet the Opportunity", with deletions)