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CRRC Corporation-H/A:Hold/Reduce,1Q16flat;visibility on new orders may be next catalyst

发布时间:2016-04-28    研究机构:香港上海汇丰

No surprise in 1Q16 results – The company released 1Q16 results after marketclose today. NPAT was +1.9% YoY to Rmb1,988m, which would make up about16% of our FY16 forecast but could be slightly below market expectation. Our FY16NPAT forecast is about 6% below market. 1Q16 total revenue of Rmb40,331m wasflat versus 1Q15 and 1Q16 gross profit margin of 22.7% was broadly in-line with1Q15 of 22.4%. We note there was a large increase in government subsidies during1Q16, which caused non-operating income to jump 107% YoY to Rmb200m. Netoperating cash flow was negative Rmb4,630m during 1Q16. We expect new ordersgrowth in 2016 to be flat to single digit. Any clarity on new orders from China RailwayCorporation during 2Q16 could be a potential share price catalyst for the stock. Thecompany has an order backlog of Rmb214bn as at the end of 2015, which wouldcover our estimated 2016 revenue by 0.9 times.

Continue to prefer Zhuzhou 3898 HK over CRRC Corp 1766 HK: The H-share istrading at 13.9x FY16e PE with 9.7% 3-year (2015-18) EPS CAGR. Our H-share TPof HKD8.7 implies 15.7x FY16e PER, in-line with its historical average trading PER.

We prefer its major electrical component supplier, Zhuzhou CRRC Times Electric(3898 HK, HKD45.2, Buy, TP HKD60), to CRRC Corp due to potential market sharegains from CNR factories and expansion in non-railway business.