In the impression of many people, the expensive high-speed rail has strong public welfare attributes and is destined to be a difficult industry to make a profit. In 2022, the ** line Beijing-Shanghai high-speed railway will lose 57.6 billion, which makes people question the profitability of high-speed rail.
But stereotypes will always have cognitive biases.
Recently, the Beijing-Shanghai high-speed railway released its 2023 performance forecast, and it is expected that the net profit in 2023 will be between 10.8 billion yuan and 12.2 billion yuan. From a loss to an annual profit of 10 billion, the Beijing-Shanghai high-speed railway took only one year.
The King Returns
The Beijing-Shanghai high-speed railway, which seems to be a counterattack in performance, is actually the return of the king.
The Beijing-Shanghai high-speed railway, which opened to traffic in 2011, has epoch-making significance in China's high-speed rail map: it is the largest investment project since the founding of the People's Republic of China, with a total investment of 220.9 billion yuan and a total length of 1,318 kilometers, connecting the two super metropolises of Beijing and Shanghai, running through the two core urban agglomerations of "Beijing-Tianjin-Hebei" and "Yangtze River Delta", and is the world's longest high-speed railway with the longest line and the highest standard.
In the fourth year after the official opening, the Beijing-Shanghai high-speed railway achieved profitability, with a profit of 65 that year$8.1 billion. From 2016 to 2019, the net profit of the Beijing-Shanghai high-speed railway continued to grow year by year, exceeding 10 billion yuan in 2018 and increasing to 11 billion yuan in 2019, with an annualized growth rate of more than 14%. Even in 2020 and 2021, the Beijing-Shanghai high-speed railway is still profitable, earning 8 billion in two years.
*: Straight flush In 2022, the Beijing-Shanghai high-speed railway will have a rare loss, on the one hand, it is naturally the extreme downturn in the industry's prosperity.
Due to the impact of the epidemic, 2022 has become the year when the transportation industry has bottomed out, and the passenger volume of the whole industry has decreased by 32% year-on-year7%。In the same year, the Beijing-Shanghai high-speed railway train only transported 1722 passengers60,000 people, a decrease of more than 50% compared with 2021, and only about one-third of 2019.
The more important reason is the drag of new business. Jingfu Anhui Company, the largest high-speed rail company in Anhui Province acquired by Beijing-Shanghai High-speed Railway in 2019, has continued to lose money in recent years, and the actual loss in 2022 is as high as 279.5 billion yuan, which has become an important factor leading to the overall loss of the Beijing-Shanghai high-speed railway.
In other words, in addition to the performance impact of Jingfu Anhui Company, the Beijing-Shanghai high-speed railway will actually remain profitable in 2022.
After the end of the epidemic, the operation of the Beijing-Shanghai high-speed railway has improved significantly.
According to the previously released 2023 semi-annual report, the Beijing-Shanghai high-speed railway train transported 2,499 passengers in the first half of last year00,000 person-times, a year-on-year increase of 3 times, and basically the same as in 2019; The operating mileage of cross-line trains is 449390,000 kilometers, nearly double the same period in 2022 and reach 116 in the same period in 20192%。
After years of running-in, Jingfu Anhui Company, which has been reducing losses year by year, may also achieve profitability for the first time in 2023, and the burden of former performance will begin to feed back to listed companies.
Lie down and win
Compared with the global status of China's high-speed railway, the sustained profitability of the Beijing-Shanghai high-speed railway is indeed not universal in the industry.
In recent years, China's high-speed rail mileage has continued to grow and has become a national business card of China. From 2012 to 2022, the mileage of China's high-speed rail has increased from 090,000 km grew to 420,000 kilometers, with an annualized growth rate of more than 15%, ranking first in the world, higher than the sum of the other nine countries in the top 10, and Germany, which ranks second, has a high-speed rail mileage of only 6,226 kilometers, less than one-sixth of China.
But high-speed rail operations are not an easy industry to make money. China Railway Group, which operates high-speed rail, has been suffering huge losses for many years. High investment and operating costs, as well as the intensity of passenger flow on different lines, make it unrealistic for China's high-speed rail to achieve full profitability in the short term.
At present, there are only 6 profitable high-speed rail lines, namely: Beijing-Shanghai, Beijing-Tianjin, Shanghai-Hangzhou, Shanghai-Nanjing, Nanjing-Hangzhou, and Guangzhou-Shenzhen-Hong Kong high-speed rail lines. Without exception, these routes are located in economically developed areas, with sufficient and sufficient high-quality passenger flow resources, and relatively suitable travel distances.
As the core high-speed rail trunk channel of China's "eight horizontal and eight vertical", the Beijing-Shanghai high-speed railway includes Beijing, Tianjin, Nanjing, Suzhou, Shanghai and other important economic towns along the way, and the population of cities along the line accounts for 11 percent of the country7% and contributed 18 percent nationallyWith 5% of GDP, the passenger flow resources in the country's high-speed rail lines are second to none.
In 2019, before the epidemic, the Beijing-Shanghai high-speed railway carried a total of 21.5 billion passengers, with less than 1% of the country's railway mileage, contributing 6% of the country's passenger traffic, can be called the country's busiest and most efficient high-speed rail station.
Beijing-Fuzhou Anhui Company, a subsidiary of Beijing-Shanghai High-speed Railway, has jurisdiction over high-quality lines such as Hebang Passenger Dedicated, Anhui Section of Hefu Railway, Anhui Section of Shanghe-Hangzhou Railway, and Anhui Section of Zhengfu Railway, all of which are important transportation hubs in the Yangtze River Delta integration region, and are at the intersection of the "eight vertical and eight horizontal" north-south passages and east-west passages, connecting Shanghai, Nanjing, Hangzhou, Hefei and other major cities in the Yangtze River Delta, and also have a good passenger flow foundation.
According to the World Bank's research, high-speed rail has a dominant competitive advantage at 150-800 kilometers and is in direct competition with civil aviation at 800-1200 kilometers. The design speed of the Beijing-Shanghai high-speed railway is 350km/h, and the average passenger distance is about 640km.
In addition to the continuous growth of high-quality passenger flow, the unique business model of the Beijing-Shanghai high-speed railway is also a magic weapon for continuous profitability.
The main business of the Beijing-Shanghai high-speed railway includes two parts: one is the railway transportation of this line, which collects fares from passengers, which is equivalent to the company's self-operated business; The second is the cross-line road network service, when the trains of other railway transport companies run on the Beijing-Shanghai high-speed railway, they will be charged road network service fees, which is equivalent to rent collection business.
In fact, the road network leasing business other than self-operated transportation has become a key factor for the Beijing-Shanghai high-speed railway to maintain profitability in the epidemic environment, and the pressure of reduced passenger flow has been largely transferred to other railway transportation enterprises.
The future is promising
In 2009, Warren Buffett invested $44 billion in the Norte Santa Fe Railroad in Burlington, the second-largest rail operator in the United States.
In the view of the stock god, the railroad has huge cost and environmental advantages, is an important promoter and beneficiary of the country's development, and investing in the railroad is to invest in the future of the American economy.
The investment logic of the stock god, coupled with foreign development experience, may allow us to see the future development prospects of the Beijing-Shanghai high-speed railway more clearly.
From the perspective of passenger demand, in the eight years from the opening of the whole line to the epidemic, the compound annualized growth rate of passenger flow of the Beijing-Shanghai high-speed railway was close to 20%, which is comparable to the growth rate of Japan's Shinkansen in the 1970s.
With the encryption of the line, Japan's Shinkansen experienced a second round of high growth in the 1980s, with an average annual compound growth rate of 8%. It can be expected that the passenger flow growth of the Beijing-Shanghai high-speed railway in the next 10 years will also be close to 10%, significantly exceeding the GDP growth rate.
In fact, the potential for passenger growth has already been preliminarily verified during the 2024 Spring Festival.
According to data from China Railways, the 2024 Spring Festival transportation is expected to send 4800 million passengers, an increase of 37% compared with the Spring Festival in 20239%, an increase of 16 compared with the Spring Festival in 20192%。As a transportation artery, the passenger flow growth of the Beijing-Shanghai high-speed railway and the Beijing-Fuzhou Anhui company should be higher than that of the railway.
*In terms of road network services, although the road network service is still calculated by the China Railway Group, the self-operated transportation business of this line still has great flexibility.
After 2016, domestic high-speed EMUs with a design speed of more than 200 kilometers per hour have achieved market-oriented pricing, and railway operating companies can set their own prices according to market competition and supply and demand.
*After liberalization, some high-speed rail lines have achieved price increases. In 2017, the speed of EMUs with a speed of 200-250 km/h in the southeast coastal areas will be increased and the price will be raised, with a price increase of 10%-50%.
At present, the overall fare level of the Beijing-Shanghai high-speed railway is low, taking the second-class seat as an example, the benchmark fare is 042 yuan per person-kilometer, compared to 21 yuan per person-kilometer, 21 yuan per person-kilometer, as the high-speed rail line with the best passenger flow, the future fare of the Beijing-Shanghai railway obviously still has a lot of room for growth.
In addition to the growth of the passenger transport and cross-line leasing business brought about by the rise in volume and price on the transportation side, the commercial potential of high-speed rail stations provides new incremental space for diversified operations outside of transportation.
In terms of diversified business, more than one-third of Japan's Shinkansen, and the operation ideas of domestic airports also provide a good example for the Beijing-Shanghai railway, and non-aeronautical revenue has always been the main source of airports in first-tier cities such as Beijing, Shanghai and Guangzhou.
The Beijing-Shanghai high-speed railway has high-quality assets in the core area of the domestic railway, and the land and station operation and development resources along the line are abundant.
**10,000 Fans Incentive Plan
If we still have confidence in the future of China's economy, we have enough reason to believe that the performance ceiling of the Beijing-Shanghai high-speed railway will be higher and higher.