By the east wind of the reform of central enterprises, the leading value of metallurgy is to be reassessed

The valuation system with Chinese characteristics is of great significance for enhancing the equity value of state-owned enterprises. At the Financial Street Forum in November 2022, the Chairman of the China Securities Regulatory Commission proposed to "grasp the valuation logic of different types of listed companies and explore the establishment of a valuation system with Chinese characteristics." In December of the same year, the Shanghai Stock Exchange issued the Three-year Action Plan on Comprehensive Service for Central Enterprises, from 1) promoting the valuation of central enterprises to a reasonable level; 2) Cooperate with the State-owned Assets Supervision and Administration Commission of the State Council to carry out the professional integration of central enterprises; 3) Actively serve and improve the three aspects of the modern enterprise system with Chinese characteristics to improve the quality of listed companies controlled by central enterprises. Under the background that local land finance is under great pressure and it is urgent to find new revenue channels to hedge land finance, it is of great significance to promote the valuation of state-owned enterprises to return to a reasonable level and enhance the equity value of state-owned enterprises to ensure local financial security. The market value of listed state-owned enterprises is large, the valuation is low, and the equity value is large. From the market value distribution of A-share listed enterprises, the total market value of central state enterprises is 43 trillion yuan, accounting for 49%, and the market value scale is the largest among listed enterprises with various attributes. As of 2023/7/31, PE/PB distribution of central soes was only 9.7/0.98 times, and that of local soes was only 15.5/1.60 times, significantly lower than that of private enterprises, which was 25.4/2.96 times. From the historical trend of valuation, the central state-owned enterprises can obtain a high valuation similar to that of private enterprises from 2006 to 2008, but after 2009, the valuation of central state-owned enterprises continues to be at a low level, and the upward recovery potential is large.

Detailed policies continue to be introduced to guide the management quality of central state-owned enterprises to improve and enhance the market value of the driving force. Recently, the SASAC held a meeting of central enterprise leaders to clarify that in 2023, the central enterprise "one profit five rate" target is "one increase, one stability and four improvements", compared with the 2022 "two profit four rate" assessment system and the "two increases, one control and three improvements" goal, in 2023 SASAC added ROE and operating cash ratio as central enterprise assessment indicators. It is expected to guide the national central enterprises to downplay the scale and pursue the actual management quality improvement. This round of assessment system is closer to the capital market standards, which is expected to unify the important interests of supervision and the market, and better stimulate the revaluation and return of the value of state-owned listed companies. At the same time, driven by a new round of state-owned enterprise reform, it is expected that more central state-owned enterprises will introduce equity incentive measures in the future, more diversified incentive methods such as options, dividends, and the transformation and sharing of scientific and technological achievements are expected to land, and the market value is expected to further enhance.

2.2. The "Belt and Road" strategy is advancing, and the leader is gaining momentum to travel further

The strategic significance of the Belt and Road Initiative in the new era has been enhanced, and the 10th anniversary is gathering momentum. The Belt and Road Initiative was proposed in 2013 and written into the Party Constitution in October 2017, making it of great strategic importance. As one of the national key high-level strategies, the "Belt and Road" will be endowed with new significance in the new era: on the one hand, it will help China further strengthen and stabilize cooperation with neighboring countries, maintain regional stability, and ensure China's national security; On the other hand, it is expected to better promote the implementation of the domestic and international double cycle strategy, accelerate the output of domestic advantageous production capacity, and is expected to increase its strength in the future. In 2017 and 2019, China held two Belt and Road Forum for Cooperation, which achieved fruitful results in five major areas: policy coordination, infrastructure connectivity, unimpeded trade, financial integration and people-to-people ties. In 2023, China is considering holding the third Belt and Road Forum, which coincides with the 10th anniversary of the "Belt and Road" initiative, which is a milestone and is expected to promote more cooperation agreements and support policies. As China's strong point, infrastructure engineering has a global competitive advantage and is an important carrier for the promotion of the Belt and Road cooperation. It is expected that under the promotion of relevant policies, the demand for overseas projects will accelerate the recovery.