Description of the event
The company announced the three-quarter report for 2023. The first three quarters of 2023 achieved revenue of 143,035 billion yuan, +5.51% year-on-year; net profit of 6.152 billion yuan, +2.06% year-on-year; net profit of 6.152 billion yuan, +2.06%; and deducted non-net profit of 4.948 billion yuan, +17.20% year-on-year. Based on this calculation, 23Q3 revenue was 55.732 billion yuan, +2.70% year-on-year; net profit was 2,691 billion yuan, -7.09%; and non-net profit was 2,665 billion yuan, +0.78% year-on-year. In the first three quarters of 2023, the company signed new orders of 211.5 billion yuan, including overseas orders of 37.6 billion yuan.
Incident comments
The railway equipment business performed brilliantly. In the first three quarters of 2023, the company's railway equipment business achieved revenue of 52.5 billion yuan, +12.41% year-on-year, mainly due to an increase in EMU and locomotive revenue. Looking at the breakdown, locomotive business revenue was 16.459 billion yuan, bus business revenue was 2,768 billion yuan, EMU business revenue was 21,658 billion yuan, and truck business revenue was 11.615 billion yuan.
Since this year, railway passenger traffic has recovered relatively well, and EMU deliveries have continued to advance. The first three quarters were delivered in the first three quarters of 2022 and some of the orders tendered in 2023. It is expected that Q4 will continue to achieve batch delivery. According to tenders, passenger traffic during the summer travel season and the 11th season all maintained high levels of operation. In the third quarter, railways across the country sent 1.15 billion passengers, an increase of 11.6% over the historical high level for the same period in 2019. The high passenger traffic level is expected to further boost the bidding demand for Q4 EMUs.
The urban rail market is expected to blossom more in the future. The company's urban rail business declined in the first three quarters, mainly due to the pace of order delivery and the planning of some routes. However, there are plenty of orders in the urban rail sector. The industry has continued to bid since this year, and is expected to achieve similar and relatively good growth throughout the year. In addition, businesses in the medium and low volume markets, “product+”, and “system+” fields are expected to expand relatively well, and the urban rail market is expected to blossom more in the future.
The new industry business is developing well. The company's new industry business achieved revenue of 55.923 billion yuan in the first three quarters, +14.77% over the same period last year, mainly due to an increase in revenue from products such as energy storage equipment and general components. The company continues to focus on emerging industries such as wind power equipment and new materials. It has achieved batch supply of large megawatt offshore generator sets, established CRRC's new energy technology research company, and focused on developing large megawatt offshore wind power equipment and onshore equipment. The new industry business has maintained a good momentum of development.
Overseas markets continue to expand. In the first three quarters of 2023, the company signed new overseas orders of 37.6 billion yuan, +63% year-on-year, accounting for about 18% of overseas orders. The company is actively expanding the international market for rail transit and new industrial business. Passenger internal combustion EMUs were exported to the UAE for the first time; the first full life cycle project was signed with the Singapore Land Transport Authority; all EMUs and comprehensive inspection vehicles operated by the Yawan High Speed Rail have arrived in Bandung; and China's first export of new energy light rail vehicles has successfully rolled off the line. China continues to promote “Belt and Road” construction, and railway construction along the route is progressing smoothly. In October, during the 3rd “Belt and Road” International Cooperation Summit Forum, CRC Changke, a holding subsidiary of the company, signed a 420 million yuan EMU sales contract with Serbia. The company and its subsidiaries have signed relevant cooperation agreements or reached cooperation intentions with Chile, Kazakhstan, etc., and rail transit has ushered in new opportunities.
Maintain a “buy” rating. We expect the company's net profit from 2023-24 to be 12.4 billion yuan and 13.9 billion yuan respectively, corresponding to PE 12.8 and 11.4 times, respectively. Maintain a “buy” rating.
Risk warning
1. The risk that railway investment falls short of expectations;
2. Risks of industrial restructuring.