CRRC(601766) SINOLINK SECURITIES·2024-10-31 06:54Investment Rating - The report maintains a "Buy" rating for China CRRC (601766.SH) [1] Core Views - The company's revenue from railway equipment has seen significant growth, with a year-on-year increase of 6.67% to CNY 152.58 billion in Q3 2024, and a net profit increase of 17.77% to CNY 7.25 billion [1] - The growth in revenue is driven by increased income from high-speed trains and passenger cars, with a notable 36.69% year-on-year increase in railway equipment revenue for the first three quarters of 2024 [1] - The report highlights a substantial increase in the bidding for major repairs of high-speed trains, indicating a robust outlook for maintenance services [1] - Railway investment is accelerating, with a 10.3% year-on-year increase in fixed asset investment in the first nine months of 2024, contributing to a recovery in demand for high-speed trains [1] - The introduction of policies encouraging the replacement of old diesel locomotives is expected to further boost the company's revenue from railway equipment [1] Summary by Sections Revenue and Profitability - In Q3 2024, the company achieved revenue of CNY 625.44 billion, a 12.22% increase year-on-year, and a net profit of CNY 30.44 billion, up 13.11% year-on-year [1] - The gross margin for Q3 2024 reached 20.93%, an improvement of 1.48 percentage points from Q2 2024 [1] Business Growth Drivers - The railway equipment business is benefiting from a surge in demand for high-speed train maintenance, with a significant increase in the number of major repair bids [1] - National railway fixed asset investment is projected to grow, with a 7.5% increase in 2023 and a 10.3% increase in the first nine months of 2024, indicating a positive trend for the company's new train sales [1] Future Projections - Revenue forecasts for 2024-2026 are CNY 258.8 billion, CNY 285.2 billion, and CNY 312.8 billion, respectively, with net profits projected at CNY 13.7 billion, CNY 15.4 billion, and CNY 16.7 billion [1] - The report estimates a price-to-earnings ratio of 18X for 2024, 16X for 2025, and 14X for 2026, supporting the "Buy" rating [1]