On November 5, the bidding announcement for the procurement project of 80 sets of the third batch of 350 km/h smart EMU Fuxing trains in 2024 was announced.

The bidding announcement for the EMU was released on November 5, including 66 sets of 8-car normal type, 10 sets of 8-car high-cold type, and 4 sets of 17-car normal type Fuxing high-speed trains, with a large scale.

The accelerated growth in railway investment, continuous increase in passenger transportation volume, and the unexpected volume in the EMU bidding, make the company's EMU revenue growth promising in the long term.

Institutions believe that the high increase in the level 5 EMU bidding volume is promising, and are bullish on the high increase in EMU maintenance business. Policies encourage equipment updates, and the renewal of old diesel locomotives is expected to accelerate.

CRRC Corporation (01766): The company's performance in the third quarter of 2024 steadily improved. Among the four major business sectors, the revenue growth of railway equipment in the railroad sector leads the way, with EMU revenue increasing significantly by 87.34%, driving profit levels up. Looking ahead to 2024 and beyond, the company will benefit from both new markets and equipment updates. 1) New markets: Railway passenger volume increased by 13.8% in the first three quarters of 2024. To meet the demand during the Spring Festival, there is still expected space for EMU bidding by the end of the year. 2) Repair and refurbishment: Repair and refurbishment revenue in the first three quarters was about 30 billion yuan, with a significant year-on-year increase. The bidding volume for high-level EMU repairs continues to exceed expectations, and the proportion of high-value level 5 repairs has significantly increased, likely driving profit levels further upward. 3) Locomotive updates: With the launch of new energy locomotives, the replacement and update of old diesel locomotives are expected to gradually begin, laying the foundation for development over the next 3 years.

Times Electric (03898): Based on historical data, the average cycle for C6 and C5 repairs of Harmony locomotives/high-speed EMUs is approximately 12 years. The Harmony locomotives entered C6 repairs in 2019 and began to ramp up gradually in 2022, remaining at a relatively high peak in recent years; high-speed EMUs were put into large-scale operation in 2010 and underwent level 5 repairs in 2020. Due to maintenance system reforms, the peak maintenance period was delayed by nearly two years. The company estimates that 2024 to 2027 will be a relatively high peak period for advanced repairs. As for the replacement of old with new, in February 2024, the National Railway Administration proposed that by 2027, old diesel locomotives reaching their lifespan would be mostly eliminated. With the improvement of renewal subsidy policies, institutions expect to bring potential income growth to Times Electric.

China Railway Signal & Communication Corporation (03969): The company is a leader in rail transit control systems and is expected to benefit greatly from updates and transformations of rail transit lines. Currently, railway-related equipment is in a period of replacement, which is consistent with the pace of large-scale equipment updates proposed in the meeting of the Central Financial and Economic Committee. The bidding and procurement of relevant equipment updates are expected to accelerate, and the demand for subsequent line upgrades (including high-speed rail line upgrades, 2G to 5G private network upgrades, and urban rail signal system upgrades) is expected to be released more rapidly. The company is the only enterprise that integrates rail transit signal communication system design, equipment, and construction in China. In 2023, the company had a market share of over 60% in the high-speed rail weak current integration business and a market share of over 37% in the urban rail signal system integration field, ranking first, and the subsequent demand for relevant updates and transformations is expected to bring new flexibility to the company's business.