We maintain "Accumulate" and TP of HK$4.08. We reduce our China CRSC's (the "Company") 2023-2025 shareholders' net profit to RMB3,901 mn (-4.6%) / RMB4,290 mn (-8.2%) / RMB 4,760 mn (-8.1%), respectively.We forecast the Company's earnings per share in 2023/ 2024/ 2025 to be RMB0.360, RMB0.396, and RMB0.441, respectively. Our TP represents 10.0x/ 9.1x/ 8.1x 2023-2025 PE ratio and 0.8x 2023 PB ratio.

The Company' revenue decreased with gross profit margin increased in 1H23. The Company's revenue in 1H23 was RMB 16.63 billion, a decrease of 9.52% YoY, mainly due to the decrease in revenue from construction projects. The Company's gross margin increased 1.8 ppts to 25.0% in 1H23.

The Company's shareholders' net profit was down 5.7% YoY to RMB1,824 mn. We believe that the Company's gross profit margin may maintain at its current level in 2H23.

The Company's newly-signed orders increased. In 1H23, the aggregate value of newly-signed orders of the Company amounted to RMB31.67 billion, representing an increase of 10.49% YoY, among which, the value of newly-signed orders in railway sector amounted to RMB9.78 billion, representing an increase of 30.15% YoY; the value of newly-signed orders in urban transit sector amounted to RMB5.85 billion, representing a decrease of 9.57% YoY. The increase in new orders will ensure revenue growth for the Company in the next two years. The Company's order cycle is about 3 years, and 97% of the sales will be recognized as revenue in about 2 years. As China rail passenger traffic has been improving significantly, we believe that new orders of the Company will maintain rapid growth. Therefore, we expect that optimistic growth of new orders may be reflected in revenue growth in 2024 and 2025.

The Company performed well in overseas markets. The Company's revenue from overseas business in 1H23 was RMB 586 million, increased by 6.59% YoY, mainly because the Company continued to push forward the progress of overseas projects, such as the Novi Sad-Subotica section of the Hungary-Serbia Railway and the Jakarta-Bandung High-speed Railway.

Besides, the value of newly-signed orders in overseas sector amounted to RMB1,384 million, representing an increase of 2,390.11% YoY. Although the proportion of overseas business revenue is small, we believe that as more and more overseas projects complete, the Company's overseas revenue will continue to grow rapidly.

Risks: Intensified competition in the industry; insufficient overseas demand; unexpected price movement in raw materials.