Glonghui, November 11 | Morgan Stanley released a report lowering China Railway's revenue forecasts for the 2024-2026 fiscal year by 8%, 10%, and 11%, respectively, to take into account lower construction activity since this year than expected and gross margin slightly eroded; net profit forecasts were lowered by 11%, 12%, and 14% to 32 billion, 34 billion, and 35 billion, respectively. Damo rated China Railway as an “increase in holdings”, and the target price was lowered from HK$6.2 to HK$5.6. It is believed that the company will benefit from a 5-year RMB 10 trillion local government debt swap plan. Coupled with improvements in accounts receivable turnover and operating cash flow, it may trigger a further re-rating.