CRRC (601766): 2Q19 speed-up tactical vehicle tender volume guidelines revised

CRRC (601766): 2Q19 speed-up tactical vehicle tender volume guidelines revised

The 1H19 results were slightly lower than our expected 1H19 results announced by CRRC: operating income of 96.1 billion US dollars, an increase of more than 11%.

4%; net profit attributable to mother is 480,000 yuan, a year-on-year increase of 16.

2%; slightly lower than our expectations, mainly due to the decline in gross profit margin of the rail transit sector.

In the single quarter, the company’s operating income / net profit attributable to mothers in the second quarter of 1919 were 56/30 billion, an increase of 5.

8% / 5.


Revenue grew steadily, and gross profit margin dropped slightly.

Revenue from the 1H19 railway equipment / urban rail segment was US $ 531.9 / 17.8 billion, an increase of 20 a year.

3% / 37.

7%, the new industry / modern service industry income was 209.3 billion yuan, and it will decline by 0 in the future.

5% / 52.

8%, the modern service industry declined due to the company’s active participation in trade business.

Railway equipment / urban rail sector / new industry gross margin decreased by more than 1.

5ppt / 1.

3ppt / 1.


1H19 comprehensive gross profit margin reduced by 0.

6ppt to 21.


Results of efficiency gains appeared, the expense ratio decreased during the period, and the net profit margin increased.

During 1H19, the company’s total expense ratio decreased by 1.

2ppt, where the management / R & D / financial expense ratio is reduced by 0 every year.

7ppt / 0.

1ppt / 0.

6ppt, the sales expense rate increases by 0 every year.

2ppt, mainly due to increased quality assurance provision for new products.

In 1H19, the company’s net interest rate rose by 0 year-on-year.

2ppt to 5.


Net cash from operating activities increased by 134 trillion, and increased by 28 trillion over a year.

Development Trend Rail transit equipment orders remain steady growth.

As of the end of June 2019, the company had USD 277 billion in orders on hand, an increase of 5% over the previous quarter, of which motor vehicles / locomotive / buses / trucks / city rails / new industry orders were 480/210/50/150 / 1,620 / 260100 million yuan, 1Q19 chain growth of -25% / + 40% / + 9% / + 83% / + 8% / + 24%.

Bidding for railway equipment will begin in the second half of the year, but the guidelines will be lowered.

As of the end of July 2019, the nation’s railway fixed asset investment had completed $ 386.8 billion, an increase of only 3 per year.


Taking into account the high growth of traffic mileage in 2019, we still maintain the judgment that the annual investment in railway fixed assets will exceed USD 800 billion in 2019, and the vehicle purchase will exceed RMB 100 billion.

However, we believe that due to the postponement of the bidding time, in the second half of 2019, the total number of high-speed EMU tenders of China Railway will be around 200, and the locomotive tenders will be around 300.

Earnings Forecast and Estimates Due to the expected decline in vehicle bidding volume, we cut down the company for 2019/20.1% / 3.

4% to 0.


51 yuan.

Under the current contradiction, the company’s A shares correspond to 17 in 2019/20.


5 times P / E, H shares are 10.


4 times.

We maintain our Outperform rating, and revise down the earnings forecast and rail industry estimates, and we cut our A / H target prices by 14, respectively.

6% / 28.

1% to 8.

65 yuan / 6.

36 Hong Kong dollars, A shares correspond to 20/17 times P / E of 2019/20, H shares correspond to 13/11 times, which is 18% / 20% upside compared to the current total.

Risks The timing of railway equipment bidding was less than expected.