Daqin Railway(601006) 国金证券·2025-02-23 04:33Investment Rating - The report assigns a "Buy" rating to the company for 2025, with a target price of 7.85 RMB based on a projected PB of 1.1x [3]. Core Views - The company is primarily a coal transportation railway company under the China Railway Group, with its core asset being the Daqin Line, which is crucial for coal transportation from Shanxi to eastern regions. The Daqin Line is expected to recover in volume due to increased coal supply efforts from Shanxi Province [1][2]. - The company's short-term freight rates are unlikely to increase, but the expected delisting of convertible bonds in February 2025 will reduce financial costs, supporting profit recovery [2]. - The company is considered a low-valuation dividend asset, with a commitment to a dividend payout ratio of no less than 55% from 2023 to 2025, and a historical dividend yield above 5% [2]. Summary by Sections Company Overview - The company operates 2465 kilometers of railway, with the Daqin Line being the main route for coal transportation, accounting for 14% of the national railway coal transport volume in 2024 [1][10]. - The company's revenue is primarily derived from freight, which constituted 73% of total revenue in the first half of 2024, while investment income from stakes in other railways contributed 17.7% to total profit [1][21]. Volume Recovery and Financial Cost Reduction - The Daqin Line's coal transport volume is expected to recover in 2025, with an anticipated increase of over 31 million tons due to supportive policies from the Shanxi government [1][44]. - The company’s financial costs are projected to decrease significantly after the convertible bonds are delisted, enhancing profitability [2][3]. Profit Forecast and Valuation - The forecasted net profit for 2024-2026 is 94.82 billion RMB, 112.78 billion RMB, and 119.86 billion RMB, with respective growth rates of -20.5%, 18.9%, and 6.3% [3][6]. - The company’s PB ratios for the same period are projected at 0.92, 0.95, and 0.92, indicating a strong recovery potential based on its asset quality and market position [3][6]. Investment Opportunities - The company is viewed as a low-valuation asset with strong recovery potential post-convertible bond delisting, which is expected to lead to a rebound in stock prices [2][3]. - The commitment to a high dividend payout ratio and historical performance in dividend yields positions the company favorably within the dividend-paying stock segment [2][3].