CRRC CORP(1766.HK):ROBUST NET PROFIT GROWTH DUE TO CHANGE IN PRODUCT MIX
CRRC CORP(1766.HK):ROBUST NET PROFIT GROWTH DUE TO CHANGE IN PRODUCT MIX
CRRC Corp (CRRC) reported 1Q24 results with in-line flat sales growth but a strong net profit growth of 63.9% YoY due to a low base and shifts in sales mix towards higher-margin railway equipment products. In 1Q24, sales of railway equipment, which contributes higher gross margin, accounted for 41.4% of total sales, representing a 54.1% YoY sales growth and expanding the overall gross margin by 3ppts against 1Q23 level. Although China Railway Co. (CRC) has not yet announced the 2024 railway bidding plan, we reckon CRRC will benefit from the solid demand for both new manufacturing and maintenance services for railway equipment. We retain our sales and earnings estimates to derive the unchanged TP of HK$6.53, which implies 48% upside. Retain BUY.
中國中車公司（CRRC）公佈了24年第一季度業績，銷售額同比持平，但由於基數低以及銷售組合向利潤率更高的鐵路設備產品轉移，淨利潤同比增長63.9％。在24年第一季度，貢獻更高毛利率的鐵路設備的銷售佔總銷售額的41.4％，同比銷售增長54.1％，總體毛利率比23年第一季度的水平增長了3個百分點。儘管中國鐵路股份有限公司（CRC）尚未公佈2024年鐵路招標計劃，我們認爲中國中車將受益於對鐵路設備新制造和維護服務的強勁需求。我們維持銷售和收益預期，以得出6.53港元不變的目標價，這意味着上漲48％。保留 “買入”。
Key Factors for Rating
評級的關鍵因素
CRRC's net profits growth outpaced flat sales growth to achieve 63.9% YoY increase mainly due to changes in product mix. In general, railway equipment segment generates the highest gross margin among all segments. In 1Q24, sales from railway equipment increased strongly by 54.1% YoY to account for 41.4% of total sales, mainly attributable to the delivery of EMU units for which the company won bids at the end of 2023. Sales from urban rail transit vehicles and infrastructure, new business, and modern services segments dropped by 24.3%, 19.3% and 13.2% YoY, respectively, which accounted for 17.2%, 37.9% and 3.6% of sales, correspondingly. The sales decline in new business segment in 1Q24 was mainly due to some disruptions in product delivery, while contracts on hand are still sufficient. New business segment contributed 34.4% of sales in 2023 and has become one of CRRC's key strategic focuses, which might become another growth driver in 2024.
中國中車的淨利潤增長超過了持平的銷售增長，實現了63.9％的同比增長，這主要是由於產品組合的變化。總的來說，鐵路設備板塊的毛利率是所有細分市場中最高的。在24年第一季度，鐵路設備的銷售額同比強勁增長54.1％，佔總銷售額的41.4％，這主要歸因於該公司在2023年底中標的EMU單位的交付。城市軌道交通車輛和基礎設施、新業務和現代服務領域的銷售額分別同比下降24.3％、19.3％和13.2％，分別佔銷售額的17.2％、37.9％和3.6％。24年第一季度新業務板塊的銷售下降主要是由於產品交付出現了一些中斷，而手頭的合同仍然足夠。新業務板塊在2023年貢獻了34.4％的銷售額，已成爲中國中車的主要戰略重點之一，這可能成爲2024年的另一個增長動力。
CRRC might benefit from the upcoming biddings for new railway equipment manufacturing and maintenance services. According to data from NBS and National Railway Administration, the number of passengers transported totaled 1.014bn in 1Q24, representing a YoY increase of 28.5%. Although CRC has not yet initiated the 2024 procurement process, we expect CRRC will benefit from the upcoming biddings due to strong demand. Also, given that the EMUs start to require advanced level of maintenances after around 6-12 years of operations, we reckon CRRC will benefit from the robust demand for maintenance service from EMUs' aging status and current high utilisation rate.
中國中車可能會受益於即將到來的新鐵路設備製造和維護服務的競標。根據國家統計局和國家鐵路局的數據，24年第一季度的旅客運輸量共計10.14億人次，同比增長28.5％。儘管CRC尚未啓動2024年的採購程序，但由於需求強勁，我們預計中國中車將受益於即將到來的競標。此外，鑑於動車組在運行約6-12年後開始需要高級維護，我們認爲動車組的老化狀態和當前的高利用率對維護服務的強勁需求將使中國中車受益。
CRRC will focus more on providing full life cycle services to boost urban railway sales. Although sales from urban railway segment, especially for subway manufacturing, have been declining during recent year due to insufficient local government budgets, CRRC now focuses more on providing system, maintenance and operation services to urban railway system to grab more opportunity.
中國中車將更多地專注於提供全生命週期服務，以促進城市鐵路的銷售。儘管由於地方政府預算不足，近年來城市鐵路板塊，尤其是地鐵製造領域的銷售額一直在下降，但中國中車現在更多地專注於爲城市鐵路系統提供系統、維護和運營服務，以抓住更多機會。
Key Risks for Rating
評級的主要風險
Weaker-than-expected railway equipment procurement.
鐵路設備採購低於預期。
Valuation
估價
We retain our sales and earnings estimates. TP remained unchanged at HK$6.53, implying 48% upside. Retain BUY.
我們保留銷售額和收益預期。目標價維持在6.53港元不變，這意味着上漲48％。保留 “買入”。
譯文內容由第三人軟體翻譯。