Daqin Railway(601006) 申万宏源·2024-06-06 06:31Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [4][7]. Core Insights - The Daqin Railway is a crucial energy corridor in China, responsible for the significant task of transporting coal from the west to the east, contributing to the national energy security system. In 2023, the company transported 620 million tons of coal, accounting for 22.5% of the national railway coal transport volume [4][17]. - The growth in coal demand, coupled with increased concentration of production areas, is favorable for the core energy railway lines. The ongoing structural reforms in coal supply have led to supply gaps in certain provinces, which, along with rising demand, has resulted in increased transport volumes [4][5]. - The report draws parallels with the Canadian National Railway's experience, suggesting that the transformation of railway transport into logistics can effectively enhance profitability for traditional railway companies in China [4][5]. Summary by Sections 1. Company Overview - The company manages a total railway mileage of 2,593.5 kilometers, with the Daqin line being the first heavy-haul railway in China [17]. - The major coal resources are sourced from regions such as Jinbei, Datong, and Ordos, with the company operating nine main transport lines and eight branch lines [4][17]. 2. Market Dynamics - The railway freight sector is expected to grow due to the ongoing "road-to-rail" policy, which aims to increase the railway's share in the overall freight volume [26]. - Coal remains the most significant freight source for the railway, accounting for 55% of the national railway freight volume in 2022 [28]. 3. Financial Performance - The company is projected to achieve net profits of 115.32 billion, 117.85 billion, and 122.76 billion yuan from 2024 to 2026, with earnings per share of 0.66, 0.67, and 0.70 yuan respectively [5][7]. - The company's revenue is expected to reach 80.38 billion, 82.45 billion, and 84.58 billion yuan from 2024 to 2026, with a slight decline in 2024 followed by growth in subsequent years [6][8]. 4. Strategic Transformation - The report emphasizes the need for the company to adopt a diversified logistics model, similar to the Canadian National Railway, to enhance its business model and profitability [4][5][45]. - The ongoing reforms by the China Railway Group to establish logistics centers are expected to reshape the company's operational framework [4][5].