On May 10, 2024, China Railway Group issued the first tender notice for the 2024 EMU.

The scope of the tender includes: the Fuxing intelligently configured EMU with a speed of 350 kilometers per hour (8 groups), 132 groups; the Fuxing intelligent configuration EMU with a speed of 350 kilometers per hour (8 groups), number 13 groups; the number of Fuxing intelligent EMUs with a speed of 350 kilometers per hour (17 groups), with a total of 165 groups. The scale of the initial tender has exceeded the full year of 2023 (164 groups for the whole of 2023), and the number of tenders increased significantly.

Huatai Securities released a research report saying that the rail transit equipment boom continues and updates/maintenance brings new opportunities. In terms of addition, fixed investment in railway companies ushered in an inflection point of growth in 23 years, and continued to increase 10.5% year-on-year from January to April '24;

The recovery and continued growth in passenger traffic brought about a recovery in EMU tenders. China Railway's first bid for 165 groups in '24 has exceeded 23 years;

In terms of stock renewal and replacement, the intensive period for advanced EMU repairs, especially level 5, is approaching, and internal combustion locomotives/railway communication signal systems have all entered the replacement cycle.

Companies related to the rail transit equipment industry chain performed well in 24Q1, and the annual performance is expected to improve as well.

Short-term railway fixed asset investment/passenger transport/EMU tenders continue to exceed expectations. Advanced maintenance and renewal iterations of long-term equipment stock will increase, and related industrial chains and companies such as rail transit vehicles and components, and communication signal systems are worth paying attention to.

Companies related to rail transit equipment:

CRRC (01766) in the vehicle manufacturing sector directly benefits from EMU tenders and advanced repair volumes;

The rail transit equipment industry chain and companies also include body parts: Times Electric (03898);

Communication signal system: China Express (03969).