CRRC(601766) Southwest Securities·2024-10-31 14:47Investment Rating - The report maintains a "Buy" rating for China CNR Corporation (601766) with a current price of 8.36 CNY [1]. Core Views - The company's performance in Q1-Q3 2024 met expectations, with revenue of 152.58 billion CNY, a year-on-year increase of 6.7%, and a net profit attributable to shareholders of 7.25 billion CNY, up 17.8% year-on-year. In Q3 2024 alone, revenue reached 62.54 billion CNY, reflecting a 12.2% year-on-year growth, and net profit was 3.04 billion CNY, up 13.1% year-on-year [1][2]. - The company's profitability is driven by lean management and the expansion of its railway operation and maintenance services, leading to an increase in net profit margin [1]. - The report highlights that all three major segments—railway equipment, urban rail, and new industries—achieved positive growth in Q3 2024, contributing to the overall performance improvement [2]. Summary by Sections Financial Performance - For Q1-Q3 2024, the comprehensive gross margin was 21.2%, a slight decrease of 0.6 percentage points year-on-year, while the net profit margin increased by 0.6 percentage points to 6.2%. The period expense ratio was 14.9%, down 0.8 percentage points year-on-year [1]. - The railway equipment segment reported revenue of 29.78 billion CNY in Q3 2024, a significant increase of 24.4% year-on-year, with the high-speed train business seeing a remarkable growth of 77.3% [2]. Market Outlook - The report indicates that railway investment is expected to rise, benefiting from equipment replacement policies and the increased volume of high-level maintenance for high-speed trains. The company is positioned to benefit from the ongoing demand for new and upgraded railway equipment [3]. - The forecast for net profit attributable to shareholders for 2024-2026 is 13.2 billion CNY, 15.1 billion CNY, and 16.8 billion CNY, respectively, with a compound annual growth rate of 13% over the next three years [3][4]. Valuation Metrics - The current price-to-earnings (PE) ratios for 2024, 2025, and 2026 are projected to be 18, 16, and 14, respectively, indicating a favorable valuation trend [4].