CHINA RAILWAY(SH:601390) Soochow Securities·2025-05-06 10:23Investment Rating - The investment rating for China Railway (601390) is "Buy" (maintained) [1] Core Views - The report indicates that revenue and profit continue to be under pressure, but overseas new contracts remain strong [7] - The macroeconomic environment is facing downward pressure, but there are expectations for increased fiscal support and improved financing conditions, which may benefit infrastructure investment [7] - The company is expected to see a recovery in valuation due to its status as a leading state-owned enterprise in infrastructure [7] Financial Performance Summary - In Q1 2025, the company achieved total revenue of 249.283 billion yuan, a year-on-year decrease of 6.2%, and a net profit attributable to shareholders of 6.025 billion yuan, down 19.5% year-on-year [7] - The revenue breakdown by business for Q1 shows infrastructure construction at 216.8 billion yuan (-8.0% YoY), design consulting at 4.7 billion yuan (-2.2% YoY), equipment manufacturing at 6.2 billion yuan (-5.8% YoY), real estate development at 6.7 billion yuan (+59.5% YoY), and other businesses at 14.9 billion yuan (+3.2% YoY) [7] - The overall gross margin remained stable at 8.5%, with slight declines in traditional business margins offset by higher margins in design consulting and real estate [7] Order and Contract Summary - The company signed new contracts worth 560.1 billion yuan in Q1, a decrease of 9.9% year-on-year, with significant contributions from overseas contracts, which increased by 33.4% [7] - As of the end of Q1, the company had a backlog of orders amounting to 7,234.1 billion yuan, an increase of 16.0% year-on-year [7] Profit Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2026 is 28.0 billion yuan and 28.5 billion yuan, respectively, with a new estimate for 2027 at 29.1 billion yuan [7] - The report emphasizes that the company’s valuation remains at historical lows, suggesting potential for recovery [7]