Times Electric(HK:03898) First Shanghai Securities·2024-04-01 16:00Investment Rating - The report maintains a "Buy" rating for CRRC Times Electric (3898) with a target price of HKD 38.1, indicating a potential upside of 53.6% from the current price [2]. Core Views - The report highlights a recovery in rail transit and rapid growth in new equipment, with a net profit growth of 21.5% in 2023, driven by a revenue increase of 20.9% to RMB 21.8 billion [2]. - The rail transit business is showing signs of recovery, with a significant increase in national railway passenger volume, which rose by 128.8% year-on-year, surpassing pre-pandemic levels [2]. - The emerging equipment business is experiencing high growth rates, particularly in power semiconductor devices and new energy vehicle components, with some segments growing over 69% [2]. Financial Summary - In 2023, the company reported revenues of RMB 21.8 billion, with a net profit of RMB 3.1 billion, translating to an earnings per share (EPS) of RMB 2.19 [2][7]. - The revenue breakdown shows rail transit business revenue at RMB 12.9 billion (up 2%) and emerging equipment business revenue at RMB 8.7 billion (up 69.6%) [2]. - The forecast for 2024-2026 projects revenues of RMB 24.5 billion, RMB 27.8 billion, and RMB 30.6 billion, with respective growth rates of 12.4%, 13.6%, and 10.0% [2][7]. Business Segments - The rail transit business is expected to benefit from ongoing demand for locomotive and train replacements, with a total of 22,400 locomotives and 4,427 standard train sets in operation by the end of 2023 [2]. - The emerging equipment segment focuses on two main areas: transportation and energy, with significant investments in research and development, amounting to RMB 2.02 billion in 2023, representing 9.3% of total revenue [2]. - The company has secured new orders for photovoltaic inverters totaling 18.6 GW, ranking among the top three in the industry [2].