2024-04-14 16:00Investment Rating - The report maintains a "Recommended" rating for China CRRC (601766) [1][2] Core Views - The company reported a significant increase in net profit for Q1 2024, with an expected range of CNY 9.23 billion to CNY 10.46 billion, representing a year-on-year growth of 50% to 70% [1] - The substantial growth in performance is attributed to changes in product delivery structure and a relatively low base in Q1 2023 [1] - The recovery in railway passenger traffic and maintenance demand is expected to drive new orders for high-speed trains and maintenance services [2] - The company is positioned to benefit from national policies promoting large-scale equipment updates and the transition from road to rail transport, which is anticipated to enhance freight demand [2] Summary by Sections Financial Performance - For Q1 2024, the expected net profit is CNY 9.23 billion to CNY 10.46 billion, an increase of CNY 3.08 billion to CNY 4.31 billion year-on-year [1] - The expected non-recurring net profit is CNY 5.83 billion to CNY 7.06 billion, with a year-on-year increase of CNY 3.79 billion to CNY 5.02 billion, reflecting a growth of 186% to 246% [1] Market Demand - During the 2024 Spring Festival, the national railway transported 484 million passengers, a 39% increase year-on-year, indicating a strong recovery in passenger traffic [2] - The demand for new high-speed trains is expected to rise due to the backlog of projects and the gradual release of procurement needs [2] - The company has signed contracts worth CNY 111.7 billion for high-speed train orders and CNY 147.8 billion for maintenance services, indicating a doubling compared to the previous year [2] Future Outlook - The company is projected to achieve net profits of CNY 141.57 billion, CNY 166.91 billion, and CNY 196.88 billion for the years 2024, 2025, and 2026 respectively, with corresponding EPS of CNY 0.49, CNY 0.58, and CNY 0.69 [2][7] - The report anticipates a stable growth trajectory for the company's revenue and profitability, supported by ongoing demand for railway equipment and maintenance services [2][7]