CRCHI(SH:688425)2024-11-01 08:23Investment Rating - The report maintains an "Accumulate" rating for the company [3]. Core Views - The company, China Railway Construction Heavy Industry (铁建重工), is a leader in tunnel engineering equipment and has shown significant growth in Q3 2024, with a notable increase in single-quarter profits due to cost reduction and efficiency improvements [1][4]. - The demand for tunnel boring machines (TBM) is expanding from transportation to water conservancy and mining sectors, supported by national strategies such as the Western Development strategy [1][4]. - The company has a competitive edge in the market, with a leading market share in TBM and specialized equipment, and is benefiting from an "overseas-first" strategy that has resulted in substantial growth in overseas orders [1][4]. Summary by Sections Company Overview - China Railway Construction Heavy Industry was established in December 2006 and became the first engineering machinery company listed on the Sci-Tech Innovation Board in 2021. It has received national recognition as a "specialized and innovative small giant" in 2021 and 2023 [1][15]. Main Business Overview - The company's main products include tunnel boring machines (TBM), rail transit equipment, and specialized equipment, with revenue contributions of approximately 50%, 29%, and 21% respectively in 2023 [1][15]. Financial Analysis - From 2017 to 2023, the company's revenue increased from 6.65 billion to 10.03 billion yuan, with a net profit rising from 1.14 billion to 1.59 billion yuan. The gross margin has remained stable between 30-35% [1][27]. Tunnel Boring Equipment Market - The total market size for full-face tunnel boring machines is approximately 24.3 billion yuan, with an annual production of around 700 units in China [1][34]. Competitive Advantages - The company holds a leading market share in TBM, with a 56% share in 2022, and has a strong presence in various specialized equipment sectors. The overseas market strategy has also shown significant results, with overseas revenue increasing by 74.28% in H1 2024 [1][4][28]. Profit Forecast - The company is expected to generate revenues of 9.52 billion, 10.95 billion, and 12.91 billion yuan for 2024, 2025, and 2026 respectively, with corresponding net profits of 1.46 billion, 1.86 billion, and 2.23 billion yuan [4][5].