Core Viewpoint - Shenyin Wanguo has initiated coverage on China Railway Construction (601186) with a "Buy" rating, indicating stable industry investment expectations for 2026 despite pressures in infrastructure and other sectors [1] Industry Summary - Investment in the industry is expected to stabilize in 2026, supported by the orderly advancement of local government debt reduction and the implementation of central "two重" projects [2] - Fixed asset investment growth has slowed this year, with infrastructure, manufacturing, and real estate facing challenges, but certain sub-sectors may benefit from national strategies [2] Company Summary - The company has shown marginal improvement in new contract signings, with a total of 8.10 trillion yuan in backlog contracts as of Q3 2025, ensuring long-term stable growth [3] - New contract amounts from 2021 to 2025 Q1-3 show a mixed performance, with a notable increase in emerging business sectors such as green environmental projects and logistics [3] - The company’s revenue and profit have faced pressure due to local government debt and the downturn in the real estate sector, with Q1-3 2025 revenue at 728.4 billion yuan, down 3.9% year-on-year [4] - The company has implemented a three-year plan to control financial metrics, resulting in improved cash flow and a better aging structure of accounts receivable [4] Valuation Summary - The H-share of China Railway Construction is significantly discounted compared to A-shares, with H-share PE (TTM) at 3.6X and PB at 0.25X, while A-share PE is at 5.5X and PB at 0.43X [5] - 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 steady increase [5]

Core Viewpoint - China Railway Construction Corporation (CRCC) reported a steady growth in its operational performance for the first three quarters of 2025, with a total new contract value of 15,187.65 billion RMB, reflecting a year-on-year increase of 3.08% [1] Group 1: Engineering Contracting Business - The engineering contracting business remains the core segment, with new contracts amounting to 11,092.30 billion RMB, a slight year-on-year decrease of 0.39%, yet still accounting for over 70% of total business [2] - The performance of the engineering contracting business in July to September was slightly weaker compared to the previous two quarters, but it remains a key area of focus [2] - The growth in green and logistics businesses was significant, with year-on-year increases of 15.44% and 28.70%, respectively, indicating positive progress in the company's transformation and diversification efforts [4] Group 2: Real Estate Development Business - The real estate development business is under pressure due to cyclical industry adjustments, with a total signed sales contract value of 542.71 billion RMB, down 11.53% year-on-year [5] - The company adopted a cautious land acquisition strategy, with only 15.70 million square meters of new land reserves added in the first three quarters of 2025 [5] - The completed area in the first three quarters reached 465.47 million square meters, significantly higher than the new construction area of 249.61 million square meters [5] Group 3: Domestic and International Business Performance - The overseas business showed remarkable growth, with new contracts totaling 2,048.209 billion RMB, a substantial year-on-year increase of 94.52%, becoming a key driver of overall performance [7] - Domestic business experienced a slight decline, with new contracts amounting to 13,139.441 billion RMB, down 3.96% year-on-year, but still representing 86.5% of total new contracts [7] - The rapid growth of overseas business is attributed to the ongoing "overseas priority" strategy and the company's deep integration into the "Belt and Road" initiative [7] Group 4: Overall Performance Summary - Overall, CRCC delivered a performance characterized by "steady progress and structural optimization" in the first three quarters of 2025, successfully transitioning growth drivers [9] - The significant growth in overseas business and the rapid development of green, logistics, and emerging industries have become new economic growth points for the company [9] - The company is actively responding to challenges in the real estate market through prudent management and delivery assurance strategies, showcasing resilience through its global layout and industrial upgrading capabilities [9]