Glonghui, June 17 | UBS published a research report saying that it is expected that China Railway will benefit from stricter cost control and equity incentive plans to improve fundamentals and increase the contribution of high-profit resource businesses. The bank lowered its earnings estimates from 2024 to 2026 by 5% to 8% to reflect FY2023 results, FY2024 first quarter results, and FY2024 results guidance. The bank believes that the market has not fully taken into account the improvement in the company's fundamentals and the increase in profit contributions to the resource business. The bank raised the company's target price from HK$4 to HK$5.2, maintaining a “buy” rating. According to the bank, starting in 2022, China Railway will focus more on return on equity and operating cash flow. It is expected that it will continue to improve return on equity and operating cash flow by prioritizing cash flow and payment conditions for new order contracts when evaluating the performance of subsidiaries. Furthermore, the bank also believes that a positive equity incentive plan can further improve the company's fundamentals. The plan requires the company to have a minimum return on recurring equity of 11.5% in 2024 and a minimum recurring profit growth of 11.3% per year.