China Communications (688009): Leading companies in rail transit control system have obvious competitive advantages

China Communications (688009): Leading companies in rail transit control system have obvious competitive advantages

Core point of view: The company is the world’s leading provider of rail transit control system solutions. The industry has a lot of room for demand. The company has obvious advantages as a leader in the domestic market, which is mainly reflected in: ①Completing multiple “China firsts” with obvious first-mover advantages.

② The scientific research team has rich experience and outstanding technical advantages.

③ It has full coverage from “design-manufacturing-system delivery” and has significant advantages in the industrial chain.

The company is also the only science and technology board company listed on AH shares so far. Considering the company’s future growth, comprehensive evaluation methods of the comparable company and AH share premium comparison method are used. We judge the company’s pricing range to be (5.


54) Yuan / share, corresponding PE is 14?

18 times.

The company focuses on rail transit control system business, and its performance has grown steadily.

① The company’s main business is unique, and there is plenty of room for improvement in overseas markets.

The company achieved operating income of 297 in 2016-2018.



1.3 billion, CAGR reached 15.


In terms of products, the company’s rail transit control system revenue accounted for 79% of the revenue.

84%, 71.

54%, 71.

03%, over 70% for three consecutive years, the main business is unique; from the perspective of market, overseas markets accounted for 1 respectively.

34%, 2.

28%, 2.

42%, the company’s domestic market is still the largest revenue, the overseas market has a lot of room for improvement.

② The company’s performance has grown steadily, and its gross profit margin has improved, which is still higher than the industry average.

From 2016 to 2018, the company realized net profit attributable to mothers30.



09 billion, CAGR reached 5.

80%, steady growth in performance, gross profit margins were 26.

20% / 24.

66% / 22.

70%, the change in income structure has led to an improvement in the overall gross profit level, but it clearly exceeds the industry average.

Rail transit control system industry belongs to the mid-to-late cycle, and future demand is guaranteed.

① The amount of investment in railway fixed assets maintained at a high level.

Since the 13th Five-Year Plan, the national railway fixed asset investment has been at a high level and has been maintained at more than 800 billion yuan. The 2019 government work report also clearly stated that the railway investment target for this year is 800 billion yuan.Based on this calculation, it is estimated that the market size of the railway control system industry in 2019-2021 will also be at a high level; ② The scale of the rail transit control system industry is closely related to the opening period, and the new round of opening has arrived.

Because railway investment and construction generally go through from construction to opening 4?
With a five-year cycle, under the smooth advancement of the “13th Five-Year Plan” period of the railway, the national railway is gradually moving from the peak period of construction to the peak period of traffic. Therefore, the construction peak in 2013-2015 will correspond to 2018?In the new round of traffic in 2020, boots will also drive the rapid growth of the rail transit control system industry.

Newly-built lines are merged to upgrade existing ones. The industry has a large market space and the company’s market share is the highest in the country.

① Railway field: Due to the different actual needs of different projects and the cost per unit mileage, we have based on the company’s implementation of the minimum price of the new railway control system contract. From 2019 夜来香体验网 to 2025, the total market size of new and updated railway lines exceeds 144 billion.Among them, the high-speed rail market accounts for over 55%. As of the end of 2018, the company’s total winning miles covered by the core products and services of the high-speed railway control system ranked first in the world, and the domestic winning mileage coverage rate exceeded 60%; ②Urban rail area: urban railUpgrading and upgrading have not yet started on a large scale, and the current update market has a large capacity. From the perspective of the supplementary line market, after calculation, the annual average market size of new urban rail line control systems exceeds 15.2 billion. The company is the largest urban rail transit control system in the country.Suppliers, based on the amount of the winning contract, report that the combined company’s market share is about 40%. Based on the number of winning lines, the market share in 2018 can reach 34.
62%, ranking first.

The company has obvious advantages as a leading enterprise, and is the only full-service chain service provider in the world’s rail transit control system industry.

There are many multinational companies in the company. From the perspective of net profit attributable to mothers in 2018, the company34.
The level of 09 billion US dollars far exceeds the domestic counterparts, and the level of leadership is significant. Through analysis, we believe that the company’s core advantages are mainly three points: ① complete multiple “China first”, the first-mover advantage is obvious; ② the scientific research team has rich experience and technologyThe advantages are outstanding; ③ Full coverage from “design-manufacturing-system delivery”, the industrial chain has significant advantages.

Estimated analysis and investment recommendations: The company’s 2019-2021 revenue is expected to be 453 respectively.

300 million, 520.

300 million, 59.8 billion, net profit attributable to mothers was 39.

03 billion, 43.

7.5 billion, 48.

9.3 billion.

Comparable company estimation method and AH share premium rate comparison method are used to estimate. We use the overlapping part of the two estimation methods as the reasonable market value interval, and the initial conversion to the reasonable market value interval of China Pass is (546,693) billion, and the pricing interval is5.


54) Yuan / share, corresponding PE is 14?
18 times.

Risk Warning: National Railway Investment Is Less Than Expected, Total Railway Postpones Tendering, Changes in Revenue Structure Lead to Decline in Company Profitability