[ET Net News Agency, 31 January 2020] J.P. Morgan raised its target price for CRRC Corp
(01766) to HK$8.3 from HK$8, driven by earnings revision and maintained its "overweight"
rating.
In light of the impact of the novel coronavirus outbreak in China, the research house
expects infra capex to be boosted as an offset to a potential slump in retail sales,
likely to be led by spending driven by the central government, including rail capex.
Given the long-awaited IPO of Beijing-Shanghai HSR finally materializing in January,
which indicates CRC's various reform initiatives have largely been concluded, JPM expects
CRC to accelerate the procurement of trains and equipment from 2020.
JPM remains constructive on China's late-cycle train and equipment procurement capex
with CRRC its top pick, driven by several positive drivers (1) Aftersales business to
remain as a growth driver for CRRC; (2) JPM expects a rebound in demand for new-build MUs
from FY2020; (3) CRRC has been striving to reduce reliance on CRC's rail budget, helped by
expanding sales of RTV/intercity trains; (4) New-build locomotive demand is well supported
by China's Highway-to-Railway shift. (KL)