The entire world is adopting clean energy as nations strive to make the world a cleaner place. Meetings are being held, regulations are being discussed, and emissions targets are being set.
We have no doubt that humanity must find clean sources of energy to survive in the long term. But the pace of adoption is slower than most would like.
This is especially true in China, which is notoriously polluted and reliant on coal.
Beijing is well aware of this problem and has taken many steps to move toward clean energy. It’s not easy for the world’s second largest economy to shift from coal to wind farms, solar panels, and hydroelectricity over a short period of time though.
Daqin Railway Company Limited (SHA: 601006) is the owner of one of China’s largest rail networks. They’re responsible for transporting coal from mines to power plants.
The firm is aware of China’s heavy reliance on coal over the short and medium term. However, Daqin also understands the shift which will inevitably happen over the long term.
Daqin Railway Stock: Positioned for Now and the Future
The main source of Daqin’s income is its 653km rail network from the coal mining center of Datong to the port city of Qinhuongdao. It’s responsible for transporting over 500 million tons of coal.
Not only did the volume of coal which Daqin transports increase from just 20 million tons in 1995 to 200 tons in 2005… but Daqin uses the monopoly it has to its advantage, gradually increasing their fees over time.
China continues to use more coal every year despite efforts to go green. Resource transportation isn’t Daqin’s only business though. The company’s over 1000km of rail systems in total consists of high-speed commuter rails and general cargo transport too.
As such, Daqin’s reliance on coal continues to decrease.
China Needs Coal, It’s That Simple
China is polluted, everyone knows it, and Beijing especially understands this. With that said, China’s emissions won’t peak until around 2030. Progress takes time in a country so large.
Beijing isn’t ignoring their problems. They’re just realistic about the time it will take to solve them.
Daqin Railway’s long-term business plan is in line with China’s strategic goals. With a low P/E ratio of under 10, strong dividend yield of above 5%, healthy ROE/ROA, and a growth model supported by economic fundamentals, Daqin Railway stock is a great way to invest in China’s rise.
The recent opening of the Hong Kong-Shanghai Stock Connect lets foreign investors buy shares listed in mainland China for the first time. A brokerage account in Hong Kong is now more useful than ever because of this.
Such an account will now give you access to all companies on the Shanghai Stock Exchange, including Daqin Railway stock.
Want to buy Chinese stocks? You might want to look at our analysis of Zhejiang – a major operator and developer of expressways in China. We also recommend a large Chinese coal company for several of the reasons mentioned in this article.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.
- Best Countries to Invest in Asia for 2018 - December 21, 2017
- Why Cambodia Real Estate is Asia’s Best Value Play - December 17, 2017
- Investing in Tbilisi Property: Value in the Caucasus - December 14, 2017
- Foreign Property Ownership in Asia: Your 5 Best Options - December 7, 2017
- Why the Singapore Dollar is Undervalued - December 3, 2017
- Investing in ASEAN: Best Move of The Decade? - November 30, 2017
- 4 Worst Countries for Investors in Asia - November 23, 2017
- 3 Easiest Places to Start Investing in Asia - November 14, 2017
- Investing Offshore? Don’t Make These Mistakes - November 9, 2017
- Why I’m Positive About Malaysia Real Estate - November 3, 2017