China CRSC's (the "Company") 2023 preliminary results were generally in-line with our previous expectations. The Company achieved total revenue of RMB37,140 million in 2023, representing a decrease of 7.7% YoY, slightly better than our previous expectations. However, its net profit attributable to owners of the company is RMB3,468 million, representing a decrease of 4.6% YoY, missing our previous expectations. Our current TP is HK$ 3.70 and our current Company rating is "Buy". We will adjust the target price based on the details of the Company's annual report but maintain the current rating as we believe the Company's prospects in 2024 are positive.
The Company's newly-signed orders increased, which may boost its performance in 2024. In the first nine months of 2023, the aggregate value of newly-signed orders of the Company amounted to RMB50.88 bn, representing an increase of 12.01% YoY. The Company's order cycle is about three years, and 97% of the newly-signed orders will be recognized as revenue within two years. Therefore, the increase in newly-signed orders in 2023 may ensure revenue growth for the Company in the next two years. We expect that the strong growth of new orders in 2023 will be reflected in revenue growth in 2024 and 2025.
We believe that the Company's rail sector will further improve in 2024. China's railway passenger traffic has recovered significantly since 2023, which may increase the demand in rail transit sector. Besides, on 23 February 2024, China's government announced to encourage a new round of equipment upgrading to boost the economy, which may stimulate upgrading demand of railway equipment. As the Company's railway sector revenue accounts for nearly half of the Company's total revenue, we believe that the increasing demand of railway equipment may improve the Company's overall performance. Therefore, we are optimistic on the Company's prospects in 2024.
Risks: Intensified competition in the industry; insufficient overseas demand; orders may not be fully converted into revenue.