Daqin Railway(601006) 信达证券·2024-09-25 08:10Investment Rating - The report assigns a "Buy" rating to Daqin Railway (601006) [2] Core Views - Daqin Railway is a leading player in China's west-to-east coal transportation, with stable operations and strong cash flow value [2] - The company's core asset, the Daqin Line, is a critical coal transportation route, accounting for 14.5% of national railway coal freight volume despite only 0.4% of total railway mileage [2][19] - The company has a robust dividend policy, with a cash dividend payout ratio of 58.1% in 2023 and a commitment to maintain a payout ratio of at least 55% from 2023 to 2025 [2][25] Business Overview - Daqin Railway primarily operates freight transportation, with coal transportation accounting for 70%-80% of revenue, while passenger transportation contributes 5%-15% [2][14] - The company's freight volume reached 7.26 billion tons in 2023, with coal shipments accounting for 85.5% of total freight volume [16] - Passenger revenue surged by 119% YoY in 2023, with passenger volume increasing by 111.5% YoY [17][18] Financial Performance - Daqin Railway's net profit reached 11.93 billion yuan in 2023, up 6.6% YoY, with a cash flow coverage ratio of 1.27x [2][23] - The company's operating revenue in 2023 was 81.02 billion yuan, a 6.9% YoY increase, with freight revenue contributing 612.38 billion yuan, up 0.8% YoY [6][16] - The company's dividend payout ratio has remained above 50% since 2019, with a cumulative cash dividend of 106.05 billion yuan from 2006 to 2023 [25] Core Assets and Expansion - The Daqin Line, spanning 658 km, is the company's core asset, with a designed annual capacity of 400 million tons and a peak capacity of 479 million tons [2][31] - The company operates 9 main lines and 8 branch lines, totaling 2,582 km in operating mileage, and holds a 41.16% stake in Shuohuang Railway, which contributed 2.47 billion yuan in investment income in 2023 [2][22] - The company also holds a 10% stake in Haoji Railway, which contributed 76 million yuan in investment income in 2023, a significant increase from -19 million yuan in 2022 [22] Freight Volume and Pricing - The Daqin Line's freight volume is expected to recover in the short term, supported by coal production stabilization in Shanxi, with a potential increase in the medium to long term due to coal source concentration and transportation structure reforms [33][36] - The company's freight pricing has been adjusted six times since 2011, with potential for further upward adjustments under the current pricing mechanism [44][46] Profit Forecast and Valuation - The report forecasts Daqin Railway's net profit for 2024-2026 to be 9.89 billion yuan, 11.28 billion yuan, and 12.03 billion yuan, respectively, with YoY growth rates of -17.08%, +13.98%, and +6.72% [47][51] - The company's dividend yield is expected to remain attractive, with a projected dividend per share of 0.30 yuan, 0.34 yuan, and 0.36 yuan for 2024-2026, corresponding to dividend yields of 4.98%, 5.68%, and 6.06% [57] - Using a DDM model, the report estimates the company's fair value at 6.87 yuan per share, supporting the "Buy" rating [58][59]