Guangshen Railway(SH:601333) Huachuang Securities·2024-09-02 03:23Investment Rating - The report maintains a "Recommended" investment rating for the company, indicating an expectation to outperform the benchmark index by 10%-20% over the next six months [1][17]. Core Views - The company reported a revenue of 12.925 billion and a net profit of 910 million for the first half of 2024, showing a year-on-year increase of 4.4% and 34.7% respectively. In Q2 alone, revenue was 6.324 billion with a net profit of 365 million, reflecting a year-on-year increase of 1.4% and 34.2% [2]. - The growth in passenger transport revenue is driven by increased operations of intercity trains and direct trains, while freight revenue has declined due to a significant drop in the volume of bulk commodities transported [2]. - The report suggests that the company's ongoing upgrades to direct trains and the future renovation projects at key stations will provide new growth opportunities [2]. Financial Summary - For the first half of 2024, the company achieved a total revenue of 12.925 billion, with a net profit of 910 million, marking a 34.7% increase year-on-year [2]. - Passenger transport revenue reached 5.465 billion, up 2.7% year-on-year, while freight revenue fell to 790 million, down 15.1% [2]. - The company's gross margin improved to 10.6%, an increase of 2.5 percentage points year-on-year, with operating costs growing at a slower pace than revenue [2]. - The earnings per share (EPS) for 2024-2026 are projected to be 0.20, 0.22, and 0.23 respectively, with corresponding price-to-earnings (PE) ratios of 16, 15, and 14 [2][3]. Valuation and Target Price - The target price for the company's stock is set at 4.63, representing a potential upside of 40% from the current price of 3.30 [5]. - The report suggests a price-to-book (PB) ratio of 1.2 times the expected net asset value for 2024, indicating the company is a potential undervalued asset [2].