Summary of Conference Call on CRRC and Times Electric Industry Overview - The conference call focused on the railway equipment industry, specifically discussing the performance and outlook of CRRC Corp Ltd and Times Electric, two major players in this sector. Key Points on CRRC Corp Ltd 1. **Financial Performance**: - CRRC reported 1H25 revenue of Rmb119.76 billion, operating profit of Rmb9.30 billion, and net profit of Rmb7.25 billion, reflecting year-on-year growth of +33%, +106%, and +80% respectively [8][11][12]. - 2Q25 revenue was Rmb71.09 billion, with a gross profit margin (GPM) of 20.7%, indicating stable performance despite slight declines in some areas compared to guidance [8][11]. 2. **Railway Equipment Segment**: - Revenue in the railway equipment segment for 1H25 was Rmb59.7 billion, up 42% year-on-year, driven by strong demand for multiple units (MUs) and locomotives [7][11]. - The company expects a stable delivery outlook with approximately 250 standard trainsets and over 500 locomotives tendering annually from 2025 to 2030 [7][12]. 3. **Tendering Updates**: - The National Railway announced tendering for 210 standard trainsets and 335 locomotives, marking significant activity in the sector [2][3]. - Total locomotives tendering in 2025 reached 455 units, the highest in the past decade, indicating a trend towards locomotive replacement [3][11]. 4. **Emerging Industries**: - CRRC's emerging industries revenue grew by 36% year-on-year to Rmb40.7 billion, although margins compressed due to a higher contribution from energy storage systems (ESS) [9][11]. 5. **Valuation and Outlook**: - The target price for CRRC-H was raised to HK$6.8, reflecting an upward revision of EPS estimates by 12% for 2025 and 8-10% for 2026-2030 [12][28]. Key Points on Times Electric 1. **Financial Performance**: - Times Electric reported 1H25 revenue of Rmb12.21 billion, with a net profit increase of 22% year-on-year [15][22]. - 2Q25 revenue was Rmb7.68 billion, with a gross profit margin of 31%, showing solid performance despite a slight decline in operating profit [15][22]. 2. **Emerging Industries**: - The emerging industries segment contributed significantly, with a 28% year-on-year growth, driven by demand for foundational components and converters [9][15]. - Times Electric's IGBT revenue reached Rmb2.416 billion, indicating strong demand in the electric vehicle market [18][31]. 3. **Market Position**: - Times Electric holds a 50-60% market share in China's railway traction systems, positioning it as a leader in the sector [29][31]. 4. **Valuation and Risks**: - The target price for Times Electric-H was increased to HK$37.0, based on a sum-of-the-parts valuation [22][36]. - Key risks include potential oversupply in the IGBT market and lower-than-expected tendering for MUs and locomotives [23][37]. Additional Insights - **Urban Rail and Infrastructure**: CRRC's urban rail revenue showed a slight decline, but management expects stabilization and growth in maintenance services [11][19]. - **Dividend Policy**: CRRC announced a cash dividend payout ratio of 44% for 1H25, indicating a commitment to returning value to shareholders [11][12]. - **Global Expansion**: Both companies are focusing on expanding their international presence, with Times Electric making strides in Southeast Asia and Europe [20][21]. This summary encapsulates the key financial metrics, market trends, and strategic outlooks for CRRC and Times Electric, highlighting their positions within the railway equipment industry.