[ET Net News Agency, 30 August 2018] Citi Research lowered its target price for China
Railway Signal & Communication (CRSC)(03969) to HK$7 from HK$8, and maintained its "buy"
rating.
The research house said CRSC's 1H turnover growth of 14% was slightly behind its
expectation of 15% earnings growth. Gross margin (GM) contracted to 21.7% from 25.2%,
which surprised the market. Citi thus reduced its earnings estimates by 3-8% in 2018-20.
Management suggested the order mix would likely shift towards railway/metro this year
rather than construction contracting in order to improve the margin. This should underpin
the GM expansion trend ahead, Citi noted. (KL)