According to the Science and Technology Innovation Board Daily on August 29th, due to the decrease in the national tender total, China Railway Signal & Communication Corporation (CRSC), a provider of rail transit control systems, saw a decline in revenue and net profit in the first half of the year.

On the evening of August 28th, China Railway Signal & Communication Corporation (CRSC) released its semi-annual report for 2024. During the reporting period, the company achieved operating revenue of 14.25 billion yuan, a year-on-year decrease of 14.33%; achieved net profit of 1.599 billion yuan, a year-on-year decrease of 12.32%; achieved non-GAAP net profit of 1.56 billion yuan, a year-on-year decrease of 8.99%; and basic earnings per share of 0.15 yuan, a year-on-year decrease of 11.76%.

Regarding the decrease in revenue, China Railway Signal & Communication Corporation (CRSC) stated that the company is focused on the main development tasks, promoting the transformation and upgrading of traditional industries, preventing operational risks, and there has been a decrease in project revenue.

China Railway Signal & Communication Corporation (CRSC) belongs to the industry of manufacturing railway transportation equipment, with main business segments including rail transit control system design integration, equipment manufacturing, and system delivery, providing full industry chain services for rail transit control systems.

The company mainly obtains orders through public bidding. The demand for the rail transit and related engineering general contracting market, in which it is located, is to some extent affected by macroeconomic factors, related industry policies, and the bidding plans of downstream customers.

In the first half of 2024, the company's accumulated new contract amount was 21.023 billion yuan, a year-on-year decrease of 33.62%. Among them, the railway sector was 9.89 billion yuan, a year-on-year increase of 1.16%; the urban rail sector was 2.983 billion yuan, a year-on-year decrease of 49.02%; the overseas sector was 3.549 billion yuan, a year-on-year increase of 156.45%; the general contracting and other sectors were 4.601 billion yuan, a year-on-year decrease of 68.62%. As of the end of the first half of 2024, the company's backlog of orders was 122.387 billion yuan.

Some analysts from institutions have told the Science and Technology Innovation Board Daily that the conversion of orders for China Railway Signal & Communication Corporation (CRSC) rail transit projects usually starts gradually after signing, and the conversion cycle is generally 2-3 years or even longer. Compared to companies in the equipment field such as CRRC Corporation, the performance conversion is slower. "But looking at the company's past order signings, the situation is continuously improving."

In terms of revenue by region, during the reporting period, the company's overseas business revenue increased by 3.24% compared to the same period last year, mainly due to the progress of overseas projects such as the Hungarian-Serbian project, the Mexico project, and the Thailand double-track project, and the increase in revenue recognition compared to the same period last year.

In terms of revenue by sector and end market, during the reporting period, the company achieved revenue of 13.111 billion yuan in the railway market, which is its main source of operating income. Operating income decreased by 2.52% compared to the same period last year; gross margin was 31.08%, an increase of 2.97 percentage points compared to the same period last year. Among them, urban rail revenue decreased by 13.13% compared to the same period last year, mainly due to the impact of insufficient orders and a decrease in subway construction business volume. The company explained that due to a significant decline in the national tendering volume compared to the same period last year, there is a large gap in contract scale compared to previous years.

China Railway Signal & Communication Corporation stated that there is an increasing number of competitors in the rail transit market, with changes in bidding rules for railway construction projects and an increase in the number of general contracting models for urban rail projects. This has compressed the company's traditional business space and put pressure on the price space of its traditionally advantageous products, leading to market competition pressure.

The reporter of the Science and Technology Innovation Board Daily noticed that while China Railway Signal & Communication Corporation is promoting the stock market business, it is also increasing its efforts to develop emerging markets and explore market increments such as high-speed rail renovation and construction, new general railways, and new urban rapid rail networks.

In the first half of the year, the company relied on its expertise in communication to undertake the Beijing advanced level autonomous driving demonstration zone 3.0 dual-intelligent dedicated network project, focusing on expanding rail transportation beyond the four fields of communication information, electrical utilities, automotive electronics, and industrial control through subcontracting business. Their own M Series battery exchange station products started to receive orders.

It is worth mentioning that China Railway Signal & Communication Corporation is also expanding into the low-altitude economy field, signing strategic cooperation agreements or reaching cooperation intentions with cities such as Nanjing, Suzhou, Hefei, Guangzhou, Chengdu, and Nan'an.

Regarding the landing and performance contribution of the low-altitude economy industrialization, analysts from the aforementioned institutions stated that the low-altitude economy business sector of China Railway Signal & Communication Corporation is still in the initial exploration and market promotion stage. "It may take some time to truly reflect in specific performance."

As for the business goals for the second half of the year, China Railway Signal & Communication Corporation stated that they will seize the good opportunity of steady growth in railway fixed asset investment and strengthen market contracting in related areas. In the field of urban rail transit, there is greater pressure on the year-on-year growth of the national total tendering volume throughout the year. The company will focus on design, integration, and other areas to resolve the risks of declining contract scale.