CRSC(SH:688009) Changjiang Securities·2024-10-28 03:16Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Views - The company is experiencing a turning point in performance, with a notable improvement in profitability. The third quarter of 2024 saw a year-on-year increase of 2.33% in net profit, reversing a trend of three consecutive quarters of decline, primarily due to growth in railway and overseas business alongside ongoing cost reduction efforts [3][4]. - Cash flow continues to improve, with net cash flow from operating activities reaching 3.40 billion yuan in the first three quarters, marking a positive turnaround [3]. - The overseas market is growing rapidly, with revenue from overseas business increasing by 65.9% year-on-year in the first three quarters, and new contract amounts rising by 95.4% [3][4]. - There is a gradual increase in demand for system updates and replacements, with the lifecycle of high-speed rail control systems typically being 10-15 years, leading to a growing urgency for equipment upgrades [3][4]. - The company is actively expanding into emerging fields such as low-altitude economy, aligning with national strategic emerging industry development plans [4]. Summary by Sections Financial Performance - In the first three quarters of 2024, the company achieved total revenue of 20.94 billion yuan, a year-on-year decrease of 15.17%, while net profit attributable to the parent company was 2.36 billion yuan, down 8.09% [3]. - The third quarter alone recorded total revenue of 6.61 billion yuan, a decline of 17.59% year-on-year, but net profit increased by 2.33% [3]. Market Position and Strategy - The company holds approximately 40% market share in domestic urban rail transit control systems and is involved in over 40 cities' control system design and integration projects [3][4]. - Recent trends indicate an increase in renovation projects, with a focus on faster delivery and better profitability in the replacement segment [3]. Future Outlook - The company is projected to achieve net profits of 3.58 billion yuan and 4.04 billion yuan in 2024 and 2025, respectively, with corresponding price-to-earnings ratios of 18 and 16 times [4].