Group 1 - The industry investment is expected to stabilize by 2026, supported by orderly debt resolution by local governments and the implementation of central "dual" projects, with certain sub-sectors likely to receive higher investment elasticity aligned with national strategies [1] - The company has shown marginal improvement in new contract signings, with a total of 8.10 trillion yuan in hand contracts as of Q3 2025, ensuring long-term stable growth despite pressures in traditional business areas [1][2] - The company's balance sheet is continuously improving, with operational cash flow showing a reduction in outflow by 9.26 billion yuan in Q1-Q3 2025, and the aging structure of accounts receivable has improved significantly [2] Group 2 - The H-shares are trading at a significant discount compared to A-shares, with H-share dividend yield at 5.93%, making it more attractive for investors [2] - The company is initiating coverage with a "buy" rating, projecting net profits of 21.4 billion, 21.7 billion, and 22.3 billion yuan for 2025-2027, with a corresponding PE ratio of 3.1X for 2026 [3] - The estimated market value for the company based on 2026 data is 77.9 billion yuan, indicating a potential upside of 14.7% from the current market capitalization [3]

Group 1 - The core viewpoint of the report is that China Railway Construction (01186) is rated as "Overweight" with stable industry investment expectations for 2026, supported by local government debt resolution and the implementation of key projects [1] - Despite pressures in infrastructure and other sectors, new order signing showed positive growth in the first three quarters of 2025, particularly in emerging businesses like green environmental projects, indicating a continuous optimization of the company's structure [1] - The company has a substantial backlog of contracts amounting to 8.10 trillion yuan, ensuring long-term stable growth [1] Group 2 - The company's financial situation is improving, with operating revenue of 728.4 billion yuan in the first three quarters of 2025, a year-on-year decrease of 3.9%, and a net profit of 14.8 billion yuan, down 5.6% year-on-year [2] - The company has implemented a three-year plan to control financial metrics, resulting in a significant reduction in cash outflow and an improvement in the aging structure of accounts receivable [2] - The proportion of accounts receivable aged within one year has increased from 67.97% in 2022 to 75.27% in the first half of 2025, indicating better cash flow management [2] Group 3 - The H-shares of China Railway Construction are trading at a significant discount compared to A-shares, with H-share PE (TTM) at 3.6X and PB at 0.25X, while A-shares are at 5.5X and 0.43X respectively [3] - The dividend yield for H-shares is more attractive at 5.93% compared to 3.87% for A-shares, with cash dividends distributed from 2021 to 2024 showing a consistent increase [3] - The company has maintained a stable dividend payout ratio, indicating a commitment to returning value to shareholders [3]

Core Viewpoint - China Railway Construction Corporation (CRCC) reported a decline in both revenue and net profit for the first half of 2025, indicating challenges in its core business segments [1] Financial Performance - The operating revenue for the first half of 2025 was 489.199 billion yuan, a decrease of 5.22% year-on-year [1] - The net profit attributable to shareholders was approximately 10.701 billion yuan, down 10.09% year-on-year [1] - Basic earnings per share stood at 0.7 yuan [1] Business Segments - The revenue decline was primarily due to reduced activities in engineering contracting, planning and design consulting, real estate development, and material logistics [1] Contractual Performance - The total new contracts signed in the first half of 2025 amounted to 1,056.1696 billion yuan, a year-on-year decrease of 4.04% [1] - Domestic new contracts totaled 942.0752 billion yuan, accounting for 89.20% of the total, with a year-on-year decline of 8.37% [1] - International new contracts reached 114.0944 billion yuan, representing 10.80% of the total, with a significant year-on-year increase of 57.43% [1] Unfinished Contracts - As of June 30, 2025, the total amount of unfinished contracts was 8,068.2444 billion yuan [1] - Unfinished domestic contracts totaled 6,539.8293 billion yuan, making up 81.06% of the total [1] - Unfinished international contracts amounted to 1,528.4151 billion yuan, accounting for 18.94% of the total [1]

Investment Rating - The investment rating for the company is "Buy-A" with a 6-month target price of 9.08 CNY, compared to the current stock price of 7.81 CNY as of April 30, 2025 [5]. Core Views - The company's Q1 2025 revenue was 256.76 billion CNY, a year-on-year decrease of 6.61%, primarily due to weak demand in traditional business sectors. The net profit attributable to shareholders was 5.15 billion CNY, down 14.51% year-on-year, with a decline in gross margin contributing to the profit drop [2][3]. - Despite the revenue and profit decline, the company has a solid order backlog of 7.86 trillion CNY, approximately 7.4 times its 2024 revenue, indicating a strong foundation for future revenue growth [2]. - The company signed new contracts worth 492.84 billion CNY in Q1 2025, with a notable increase in overseas contracts by 30.10% year-on-year, while domestic contracts decreased by 13.17% [4]. Summary by Sections Financial Performance - In Q1 2025, the company experienced a gross margin decline of 0.28 percentage points, leading to a sales net profit margin of 2.38%, down 0.20 percentage points year-on-year. The operating cash flow improved, with a net outflow of 38.95 billion CNY, which is 7.65 billion CNY less than the previous year [2][3]. Order and Contract Activity - The new contract value in Q1 2025 was 492.84 billion CNY, with domestic contracts at 448.68 billion CNY and overseas contracts at 44.16 billion CNY. The growth in the green environmental sector and railway engineering contracts was particularly strong, with increases of 77.05% and 66.25% year-on-year, respectively [4]. Earnings Forecast - The company’s revenue projections for 2025-2027 are 1.08 trillion CNY, 1.10 trillion CNY, and 1.11 trillion CNY, with expected year-on-year growth rates of 1.50%, 1.30%, and 1.30%. The net profit forecasts for the same period are 22.47 billion CNY, 22.73 billion CNY, and 22.99 billion CNY, with corresponding growth rates of 1.15% each year [9][10].