Sinolink: Accelerate the construction of a unified and open transportation market, with railways, roads, and other sectors expected to benefit.

Sinolink released a research report stating that the opinions on accelerating the construction of a unified and open transportation market have been issued, which is expected to benefit multiple sectors such as railways and highways. Specifically, the reform of the railway sector is imperative, supporting diversified and moderate competition; the highway policies are expected to be optimized, focusing on toll road systems and maintenance systems; deepening reforms in lower airspace management, with vast potential for the development of general aviation and low-altitude economy. At the same time, there is also an emphasis on strengthening the safety supervision of dangerous goods transportation and protecting the legitimate rights and interests of express delivery personnel, which will help promote efficient circulation of goods and ensure social harmony and stability. On December 23, 2024, in order to deepen the reform of the comprehensive transportation system and accelerate the construction of a unified and open transportation market, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Opinions on Accelerating the Construction of a Unified and Open Transportation Market", which involves railways, highways, logistics, express delivery, civil aviation, and other specific sectors. Sinolink's main points are as follows: -The reform of the railway sector is imperative, supporting diversified and moderate competition. -The opinions propose to "accelerate the market-oriented reform of competitive links in industries such as railways... research and develop a list of public service catalog for railways, postal services, etc., and improve the standards and subsidy rules for public services." -The current railway industry in China only has one main operating entity, the National Railway Group, with a net profit margin of only 0.27% in 2023. In the future, passenger railway services may be differentiated, with conventional rail passenger services positioned as public services becoming more clear and receiving more subsidies from the government, while the marketization level of high-speed rail passenger services continues to improve through more market competition to enhance the profitability of railway operating companies. -The highway policies are expected to be optimized, focusing on toll road systems and maintenance systems. -The opinions propose to "promote the reform of toll road systems and maintenance systems, and optimize toll road policies," indicating that the "Regulations on Toll Road Management" may be issued soon, focusing on toll road systems and maintenance systems. -Along with the continuous rise in construction costs, the current highway industry is facing increasing debt pressure, leading to the need for breakthroughs in the existing toll period policy. The toll duration may be extended, providing an opportunity for overall industry valuation repair. Additionally, considering past revisions, the new regulations may stipulate that the toll standards for toll roads can be re-adjusted after the expiry of the toll period, implementing maintenance management fees to meet the funding needs of maintenance management. -Strengthening safety supervision of dangerous goods transportation and favoring leading companies in the chemical logistics sector. -The opinions propose to "improve the system and mechanism for transportation safety and emergency management... strengthen safety supervision in key areas such as passenger and dangerous goods transportation to prevent and control major accidents in the transportation sector." -Currently, the domestic chemical logistics industry is highly fragmented, with many small and medium-sized enterprises facing safety and environmental issues and high risk factors. In recent years, regulators have accelerated the issuance of a series of policies to phase out backward companies. Leading companies in the industry are able to meet customer demands for safe, stable, and efficient logistics, with the potential for further market share enhancement. -Emphasis on protecting the legitimate rights and interests of express delivery personnel, promoting efficient circulation of goods and social harmony and stability. -The opinions propose to "safeguard the legitimate rights and interests of consumers and employees... improve the working environment and conditions of employees in the transportation sector, regulate business operations and labor practices of enterprises, and protect the legitimate rights and interests of groups such as express delivery personnel." -The express delivery industry plays a crucial role in China's economy and social life, with the volume of express deliveries surpassing 150 billion pieces in 2024. Express delivery personnel, as frontline workers in the industry, directly affect the quality and efficiency of express services. Guaranteeing their rights can ensure the stable operation of the industry, promoting efficient circulation of social goods. Moreover, the large scale of express delivery personnel and protecting their rights is also conducive to social harmony and stability. Leading express delivery companies prioritize the rights of delivery personnel, ensuring that they receive timely and fair compensation through direct payment linkages, reducing the possibility of fee leakage or deduction. -Deepening reforms in lower airspace management, with vast potential for the development of general aviation and low-altitude economy. -The opinions propose to "improve the system and mechanism for comprehensive transportation management... continue to promote reforms in air traffic control systems, deepen reforms in lower airspace management, and develop general aviation and the low-altitude economy." -In recent years, with the continuous development of China's economy and society and the continuous improvement of technological level, the low-altitude economy has entered a rapid growth stage, with various regions actively exploring opportunities. Since 2024, 29 provinces (regions, municipalities) have included the development of low-altitude economy in their government work reports. However, the current development of the low-altitude economy in China faces issues such as lack of top-level design and imprecise management of airspace resources. The release of the opinions is expected to accelerate reforms in air traffic control systems and promote the further development of general aviation and the low-altitude economy. Investment recommendations Recommended: Beijing-Shanghai High-Speed Railway (601816.SH), Milkyway Intelligent Supply Chain Service Group (603713.SH), Xingtong Shipping (603209.SH), Jiangsu Expressway (600377.SH), ZTO EXPRESS-W (02057). Risk warning: Regulatory risks, fluctuation risks in highway and railway toll rates, macroeconomic risks, operational safety risks, risks of price wars exceeding expectations.