Zhi Tong Cai Jing·2025-10-08 08:32Core Viewpoint - Morgan Stanley has upgraded the forecasts for China CNR (601766) and CRRC Times Electric (03898), reflecting a more optimistic outlook based on strong order acquisition in Q3, improved demand visibility, and a shift towards cyclical growth in the industry [1][2] Group 1: Company Performance - China CNR's H-share target price has been raised from HKD 6.8 to HKD 8, while the A-share target price has been adjusted down from RMB 10.1 to RMB 10 [1] - CRRC Times Electric's H-share target price has increased from HKD 43 to HKD 50, and the A-share target price has been raised from RMB 59 to RMB 68 [1] - Since July, the average H-share price of both companies has risen approximately 30%, compared to a 10% increase in the Hang Seng Index, while the A-shares have increased by 15%, against an 18% rise in the CSI 300 Index [1] Group 2: Industry Trends - The upgrade is supported by several positive catalysts, including stable financial performance from CNR, strong railway fixed asset investment (up 6% year-on-year over eight months), and accelerating passenger volume growth (up 7% year-on-year during peak summer travel) [2] - These factors are translating into healthier order reserves and more predictable earnings [2] - Both companies maintain a net cash position and possess strong operating cash flow generation capabilities, with valuations still below long-term cycle medians, providing a solid foundation for further upside [2]