CRSC(688009) 东吴证券·2024-11-24 01:30Investment Rating - The report assigns a "Buy" rating for China Railway Signal & Communication Corp (688009) for the first time [1]. Core Views - China Railway Signal & Communication Corp is a leader in the rail transit signal system and a pioneer in domestic substitution of signal systems. The company faced short-term pressure on performance in 2023, with revenue of 37.087 billion yuan, down 7.79% year-on-year, and a net profit of 3.477 billion yuan, down 4.30% year-on-year. The main business of rail transit signal systems remains stable, while the engineering general contracting business is under short-term pressure. The company’s order delivery model and the correlation between new orders and downstream market conditions are crucial for future performance [1][2][3]. Summary by Sections 1. Company Overview - China Railway Signal & Communication Corp has a history of over 70 years in the rail transit signal system sector, evolving from the Ministry of Railways' communication signal engineering company. The company has achieved significant advancements in autonomous and controllable signal systems [1][2]. - The company is a state-owned enterprise with a stable shareholding structure, and its subsidiaries have clear business divisions [1][2]. 2. Communication Signal System - The railway communication signal system market is expected to benefit from the recovery of fixed asset investment in railways, with a projected market space of 216 billion yuan in 2024 and 256 billion yuan in 2025, reflecting year-on-year growth of 12% and 19% respectively [1][2]. - The urban rail communication signal system faces short-term pressure due to a slowdown in new construction, but there is significant demand for updating old lines, with a combined market space of approximately 405 billion yuan for new and updated systems [2]. 3. Engineering General Contracting - The company is gradually exiting the municipal construction market, focusing on the rail transit control system sector. In the first three quarters of 2024, new engineering general contracting orders fell by 77% year-on-year, while revenue from this segment dropped by 68% [3]. - The structural optimization of the engineering general contracting business is expected to enhance competitiveness in the long term [3]. 4. Profit Forecast and Investment Recommendation - The report forecasts net profits of 3.569 billion yuan, 3.992 billion yuan, and 4.462 billion yuan for 2024, 2025, and 2026 respectively. The current stock price corresponds to dynamic P/E ratios of 20, 18, and 16 times for the respective years [1][3].