CHINA RAILWAY(601390) Haitong Securities·2024-11-03 06:41Investment Rating - The investment rating for China Railway (601390) is "Outperform the Market" and is maintained [1]. Core Views - The report highlights that in the first three quarters of 2024, the company achieved revenue of 818.48 billion yuan, a year-on-year decrease of 7.30%, and a net profit attributable to the parent company of 20.57 billion yuan, down 14.33% year-on-year [5]. - The report notes a narrowing decline in revenue for Q3, with a year-on-year decrease of 6.13%, while net profit showed a more significant decline of 19.05% [5]. - The company’s gross margin decreased by 0.29 percentage points to 8.80% in the first three quarters of 2024, impacting profitability [5]. - New orders in emerging businesses and resource utilization are growing rapidly, with total new orders signed in the first three quarters of 2024 amounting to 15,278.6 billion yuan, a decrease of 15.2% year-on-year [5]. - The report projects net profits for 2024-2025 to be 31.65 billion yuan and 32.08 billion yuan respectively, with a reasonable valuation range of 7.77 to 8.51 yuan per share [5]. Summary by Sections Financial Performance - In Q3 2024, the company reported a revenue of 2,000.00 billion yuan, with a year-on-year decline of 6.13% and a net profit of 5.00 billion yuan, down 19.05% [5]. - The gross margin for the first three quarters of 2024 was 8.80%, down from the previous year, with various business segments showing different trends in profitability [5][6]. - The operating cash flow improved in Q3, with a net outflow of 19.25 billion yuan, a decrease of 48.75% compared to the previous quarter [5]. Order Book and Future Outlook - The company’s new signed orders in emerging businesses increased by 23.4%, driven by growth in water conservancy and clean energy sectors [5]. - As of Q3 2024, the company had an uncompleted contract amount of 63,252.6 billion yuan, which is 5.02 times its revenue for the year 2023, indicating a solid backlog for future performance [5]. Valuation and Earnings Forecast - The report estimates the company's net profit for 2024 and 2025 to be 31.65 billion yuan and 32.08 billion yuan respectively, with a projected PE ratio of 12-13 times for resource business and 5-5.5 times for traditional business [5][6]. - The reasonable value range for the stock is set between 7.77 and 8.51 yuan, maintaining an "Outperform the Market" rating [5].