Economic decline but demand for local government smart transportation investment remains unchanged

Policy protection, growth of transportation investment growth (1) Urban traffic management is increasingly heavy, and the demand for intelligent transportation investment in the second and third line is prominent. In 2011, the traffic investment in some cities accelerated, and the demand in second and third-tier cities was prominent. For example, cities such as Xinjiang, Hefei, Lanzhou, Zhongshan, Shenyang, Dalian, Nanning and Guiyang were not major investment cities before 2011, but investment quickly emerged in 2011.

(2) Promotion of policy planning and development of strategic guarantees. The forthcoming "Intelligent Transportation Development Strategy for the Transportation Industry (2012-2020)" is expected to further boost the industry's boom.

(3) Pulling economic growth, growth in traffic fixed asset investment picked up. According to the data of fixed assets investment of the Bureau of Statistics from January to June this year, the growth rate of fixed-asset investment in road traffic has recovered in June in the context of steady growth. The data means that local governments will restart investment in the transportation industry and smart transportation investment may benefit from this.

In the context of the economic downturn, the demand for local government's smart transportation investment has not decreased. Due to the impact of the macro economy in the first half of the year, the total investment growth of the intelligent transportation market has declined, but it is still close to a 20% increase. The main reason may be:

(1) The construction of intelligent traffic belongs to the category of people's livelihood projects, and the support for policies is greater;

(2) The scale of investment is relatively small compared to other industries, mainly based on the system construction and updating of existing urban transportation;

(3) There are investment peaks and troughs for individual cities, but the national average investment growth rate is relatively stable, and the industry is still in the early stage of rapid development;

(4) The rapid development of the industry has attracted a large number of non-traditional intelligent transportation companies to enter, and investment and financing methods such as BT have increased the speed of development of the industry.

As the project amount increases, BT has become an important investment and financing model. (1) The number and amount of tens of millions of projects have increased rapidly, reflecting the acceleration of market demand. The total market scale of Q2 million projects in 2012 was 1.32 billion, an increase of 22.2% compared with the previous period and an increase of 13.8% year-on-year. Ten million projects accounted for 46% of the Q2 total market size.

(2) BT has become an important investment and financing method to increase the speed of development of the industry. The adoption of the BT approach puts higher demands on participating companies' financial capabilities.

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