Recently, the State owned Assets Supervision and Administration Commission of the State Council issued the Notice on Printing and Distributing the "Double Hundred Actions" Work Plan for SOE Reform (GZFJ [2018] No. 70). The State owned Enterprise Reform Leading Group of the State Council decided to select more than 100 central enterprise subsidiaries and more than 100 local state-owned backbone enterprises to implement the "Double Hundred Actions" for SOE reform from 2018 to 2020. In recent days, many listed machinery companies, such as XCMG, XIAMEN, North Huachuang, and Shenyang Machine Tool, announced that they were included in the list of "Double Hundred Enterprises".
 
Expand the scope and upgrade, and comprehensively promote the reform of state-owned enterprises. From the issuance of the 1+N series documents for deepening the reform of state-owned enterprises to the four reform pilots, from the ten reform pilots to the "double hundred actions", they all come down in one continuous line. The "Double Hundred Action" will enable the reform to be carried out from point to area in an all-round way. In the second half of the year, the pilot program will be further expanded and developed in depth. More local state-owned enterprises will enter the pilot program. The downward trend of the focus will become more obvious and the reform situation will become more active. The SASAC requires enterprises shortlisted for the "Double Hundred Action" to achieve "Five Breakthroughs and One Adherence", that is, to achieve breakthroughs in the reform of mixed ownership, corporate governance structure, market-oriented operation mechanism, incentive mechanism and issues left over from history, while adhering to the leadership of the Party.
 
A number of machinery manufacturing enterprises have been selected into the "Double Hundred Action", which will lead their own industry breakthroughs. The selection criteria for this "Double Hundred Enterprises": First, it is highly representative. It has strong influence in the development of the industry. In principle, it should be a profit center rather than a cost center. Second, it has great development potential. Third, there is a strong will to reform. The main principals and business departments of the recommended enterprises can fully understand and grasp the spirit of state-owned enterprise reform, dare to be the first, dare to explore, overcome difficulties, and take the lead in making breakthroughs in key areas and key links of reform. At present, according to the announcements made by the listed companies, many enterprises in the machinery industry have been selected, including XCMG, Liugong and Xiamen Engineering in engineering machinery, petrochemical machinery and COSL in the oil and gas industry, North Huachuang in semiconductor equipment, Zheng Meiji in coal mining equipment, Shenyang Machine Tool in machine tool industry, and CRRC in railway equipment, which basically conform to our previous judgment. We believe that these enterprises will further stimulate their vitality, play a leading role in the industry and increase their core competitiveness by joining the Double Hundred Initiative.
 
The reform of state-owned enterprises is expected to become the investment theme for a long time in the future. For the country, the reform of state-owned enterprises can not only play a leading role in stimulating the domestic economy and assisting the transformation and upgrading of industries, but also enhance the country's international competitiveness, laying a good foundation for international trade; For enterprises themselves, reform can not only optimize management decision-making ability and promote modern enterprise governance, but also further optimize resource allocation to maximize utility. From the perspective of capital market, the reform of state-owned enterprises will be an investment theme that can last for a long time.
 
Investment suggestions: considering that the reform policies and support for state-owned enterprises will continue to increase in the next few years, which will have a greater positive effect on enterprise operation and management, it is recommended to focus on enterprises that have been included in the "Double Hundred Plan", such as XCMG, Liugong, Zheng Meiji, Beifang Huachuang and CRRC; And enterprises that are expected to carry out state-owned enterprise reform in the future, such as Anhui Heli, Yituo Shares, Shanghai Electromechanical, Guangri Shares, etc.