CCB International Securities (CCBIS) cut its target price for China Railway Signal & Communication (CRSC) (03969) to HK$4.6 from HK$5.4 and retained its "outperform" rating.
The research house said the total railway investment was RMB781bn in 2020, slightly below the initial RMB800bn target, likely dragged by the Covid-19 outbreak. Looking ahead, CCBIS expects railway investment to be maintained at around RMB800bn in 2021, with high-speed cargo rail, intercity high-speed rail, and mid-to-western China development the
focus.
After the upgrade of the Beijing-Tianjin HSR in 2018, China's HSR system gradually transitioned to a maintenance & upgrade cycle, for which CRSC, the dominant player in signal equipment, is well-positioned to benefit. The national railway contributes about half of CRSC's operating earnings and CCBIS expects it to continue to generate steady
profits and cash flow for CRSC.
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