CRRC (601766): Performance is slightly higher than expected. Locomotive, truck, and rail services will drive growth this year.

CRRC (601766): Performance is slightly higher than expected. Locomotive, truck, and rail services will drive growth this year.

Investment Highlights The 2018 performance was slightly lower than expected: the company actually realized revenue of 219.1 billion in 2018, an increase of 3.

82%; net profit attributable to mothers was 1.13 million yuan, a year-on-year increase of 4.

76%; net operating cash flow inflow of 18.9 billion, an annual increase of 16.

At the end of the year, assets and liabilities decreased by 58%, a significant decrease from the beginning of last year4.

05pct; long-term borrowings were reduced from 446 ppm to 88 ppm in the previous year, and the asset structure was optimized.

Revenue and net profit were lower than the budget forecast and decreased by 4 respectively.

3%, 3.

4%, mainly due to a total of 29% of the total revenue of the new industry and modern services business revenues declined by about 8%.

Considering that the impact of new energy vehicle business in new industry business and modern service business is gradually eliminating the impact of China’s gradual logistics and trade business, the two block businesses are expected to resume low-speed positive growth in the future.

In addition, the company’s new orders in 2018 were 3049 trillion, and at the end of the year, 2,327 trillion, which was basically the same as the same period last year.

Dividends for every 10 shares of the company plan.

5 yuan, a total of 43 trillion is expected to be distributed, the dividend rate is 38%.

Motor vehicle and locomotive revenues have steadily increased: The company’s overall railway equipment business revenue was US $ 120.6 billion, an annual increase of 11.

46%, accounting for 55% of total revenue; of which EMU / locomotive / truck / passenger revenue was 666.72 / 261/203 / 7.4 billion yuan, with growth rates of 15.

9% / 11.

4% /-7.

7% / 42.

7%, with sales of 2608 units / 921 units / 45974 units / 485 units respectively.

The re-elevation of trains and locomotives is the leading growth in railway equipment business.

Considering that 326 EMUs were delivered in 2018, and 343 were tendered in 2018, the number of EMU tenders remained at 350 in the next two years. It is expected that EMU delivery will remain stable in the next three years;Demand for pull cars and trucks is gradually emerging.

In 2018, the company delivered a total of 921 locomotives, of which more than 800 were iron and trucks were delivered4.

More than 50,000 vehicles.

According to the goal of increasing the national railway freight volume by 30% by 2017 in 2020 and the delivery volume in 2018, it is expected that the bidding and delivery of aircraft and trucks may exceed expectations.

Urban rail is 苏州夜网论坛 in full supply, and domestic demand is gradually being released: The company’s urban rail and urban infrastructure business realized revenue of 34.8 billion US dollars, growing continuously3.

52%; of which, the revenue of urban subway is 321 million, and 6,396 urban subways are sold.

After the Development and Reform Commission tightened the approval of urban rail construction after 2017, the number of urban rail tenders in 2018 fell to more than 6,200 vehicles; in July 2018, the State Council issued the “Opinions of the General Office of the State Council on Further Strengthening Urban Rail Transit Planning and Construction Management”,The NDRC subsequently approved the urban rail planning in Suzhou, Chongqing, and Changchun.

In the second half of 2018, the construction progress of urban rail projects in various regions 深圳桑拿网 has accelerated significantly. It is estimated that the number of national metro rail tenders will exceed 8,000 in the next three years.

The gross profit margin of the company’s urban rail and urban infrastructure businesses has steadily increased in the past three years, being 16 respectively.

3%, 16.

9%, 17.

2%; Benefiting from the acceleration of domestic urban rail construction, it is expected that the company’s business growth rate will be in the range of 15% -20% in the next three years, while the gross profit margin will continue to increase slightly each year, and the profitability will continue to strengthen.

Investment suggestion: Based on the above judgments on the growth of each business in the next three years, considering that 2018 revenue and profits are slightly lower than expected, we slightly (about 2%) lower our revenue forecast for 2019-2020, and expect the company’s operating revenue for 2019-2021They are 2469 trillion, 2768 trillion, and 3101 trillion, respectively. The net profit attributable to mothers is 129 trillion, 145 trillion, and 16.8 billion.

According to the current sustainable and profit forecast, PE is 20 times in 2019, maintaining the “overweight-A” rating.

Risk reminder: The actual investment in railway fixed assets is less than expected; the domestic motor vehicle bidding progress and volume are lower than expected; the implementation of North American urban rail orders or affected by local government policies.