[ET Net News Agency, 3 September 2019] Citi Research lowered its target price for China
Railway Group (CRG)(00390) to HK$7 from HK$8.5 and maintained its "buy" rating.
The research house said CRG's 2Q earnings growth decelerated to 5% from 20% in 1Q,
mainly owing to GM contraction to 10.1% from 11.3%. This came in slightly below Citi's
expectation, so it trimmed its EPS forecasts by 3-4% during 2019-21.
On the positive side, Citi said finance cost notably reduced to Rmb1.07bn versus
Rmb1.4bn last year so OP/finance cost ratio rose to 8.8x from 6.6x. This is thanks to
CRG's strategy of financial de-leverage and refinancing at a lower rate, which may
sacrifice earnings growth slightly. (KL)