Daqin Railway(601006) 国金证券·2025-02-22 07:01Investment Rating - The report assigns a "Buy" rating for the company with a target price of 7.85 RMB, based on a projected PB of 1.1x for 2025 [3]. Core Views - The company is primarily a railway transportation company under the China National Railway Group, focusing on coal transportation, with its core asset being the Daqin Line, which is crucial for coal transportation from Shanxi province [1][10]. - The Daqin Line is expected to see a recovery in coal transport volume due to increased supply efforts from the Shanxi government, with a projected increase of over 31 million tons in coal production by 2025 [1][44]. - The company has faced a decline in net profit due to reduced coal production in Shanxi, with a 23% year-on-year drop in net profit for the first three quarters of 2024 [1][37]. Summary by Sections Investment Logic - 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 from railway freight constituted 73% of its total revenue in the first half of 2024, while investment income from stakes in other railways contributed 14.3 billion RMB, making up 18% of total profit [1][21]. - A correlation exists between the company's performance and the transport volume of the Daqin Line, which has historically reached a maximum of 450 million tons [1][19]. Short-term Price and Financial Outlook - Short-term freight rates are expected to remain stable, with no adjustments since 2018, but a decrease in financial costs is anticipated following the delisting of convertible bonds in February 2025 [2][3]. - The company has committed to a dividend payout ratio of no less than 55% from 2023 to 2025, with historical dividend yields above 5% [2][3]. Profit Forecast, Valuation, and Rating - The forecasted net profits for 2024, 2025, and 2026 are 9.48 billion RMB, 11.28 billion RMB, and 11.99 billion RMB, respectively, with year-on-year growth rates of -20.5%, 18.9%, and 6.3% [3][6]. - The company’s PB ratios for the same years 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].