CHINA RAILWAY(601390) 长江证券·2024-05-20 08:32Investment Rating - The investment rating for the company is "Buy" and is maintained [5]. Core Views - The company experienced a decline in revenue and net profit in Q1, with revenue at 265.01 billion yuan, down 2.56% year-on-year, and net profit at 7.48 billion yuan, down 5.04% year-on-year [5][6]. - New orders signed in Q1 also saw a year-on-year decrease across various segments, with significant drops in sectors such as specialty real estate and asset management [5]. - The company's gross margin and expense ratio both declined year-on-year, while impairment losses decreased compared to the previous year [5][6]. - Cash flow from operating activities showed a net outflow of 68.07 billion yuan, which is an increase in outflow by 30.04 billion yuan year-on-year, indicating cash flow volatility [6]. - The report emphasizes the ongoing reforms in state-owned enterprises and the potential revaluation of the company's resource business, projecting stable growth in infrastructure demand and an increase in orders for 2024 [6]. Summary by Sections Financial Performance - In Q1, the company reported a revenue of 2650.11 billion yuan, a decrease of 2.56% year-on-year, and a net profit of 74.81 billion yuan, down 5.04% year-on-year [5]. - The gross margin for Q1 was 8.58%, a decline of 0.33 percentage points year-on-year, while the net profit margin decreased to 2.82%, down 0.07 percentage points year-on-year [5][6]. Order Intake - New orders signed in Q1 totaled 4,701.20 billion yuan for engineering construction, down 7.1% year-on-year, with notable declines in design consulting and specialty real estate [5]. Cash Flow and Financial Health - The company faced a net cash outflow from operating activities of 680.65 billion yuan, with a cash collection ratio of 98.53%, down 5.53 percentage points year-on-year [6]. - The asset-liability ratio increased to 74.64%, up 0.93 percentage points year-on-year, indicating a higher level of debt [6]. Future Outlook - The report highlights the acceleration of state-owned enterprise reforms and resilient infrastructure demand, projecting net profits for 2024-2026 at 37.34 billion, 40.78 billion, and 44.57 billion yuan respectively, with corresponding PE ratios of 4.36, 3.99, and 3.65 times [6].