First Shanghai Securities·2025-08-25 09:20Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 51.3, representing a potential upside of 31% from the current price of HKD 39.08 [2][5]. Core Insights - The company's rail transit business continues to perform well, with maintenance services gaining a larger share of revenue. The demand for new trains is expected to increase due to high passenger volumes and government policies promoting the replacement of old locomotives [5]. - The semiconductor segment is entering a capacity ramp-up phase, with significant growth in revenue from core components and new energy generation. The company is also establishing itself in the automotive electric drive sector [5]. - Revenue and net profit forecasts for 2025-2027 are optimistic, with projected revenues of RMB 27.4 billion, RMB 30.3 billion, and RMB 33.0 billion, respectively, and net profits of RMB 4.3 billion, RMB 4.8 billion, and RMB 5.3 billion [4][5]. Financial Summary - For the fiscal year ending December 31, 2023, the company reported revenue of RMB 21.8 billion, a year-on-year increase of 20.9%, and a net profit of RMB 3.1 billion, up 21.5% [4][6]. - The company’s gross margin improved by 4.4 percentage points to 32.0%, driven by a favorable change in revenue structure across its business segments [5]. - The earnings per share (EPS) is projected to grow from RMB 2.20 in 2023 to RMB 3.12 in 2025, reflecting a compound annual growth rate of 19.1% [4][6].