报告名称：CRRC CORP(01766.HK)More negative catalysts
报告类型：港股研究
报告日期：2016-01-13
研究机构：法国巴黎银行
股票名称：中国中车
股票代码：01766,601766
页数：10
简介：Equipment demand will decline y-y in 2016, in our view
Based on the China Railway Group/CRC order schedule, weestimate domestic new line delivery will decrease 58% y-y in 2016,translates into a 22% y-y decline in domestic overall rail investmentand a 6% decline in rail equipment investment. Caixin reported a30% y-y drop in 2016 equipment investment, implying downside riskto both our earnings forecast and target valuation.
Draft 13th FYP indicates downside risk
The overall rail investment target in the draft 13th FYP is RMB3.5t-3.8t (RMB3.58t in 12th FYP), lower than the market expected (RMB4tand above). Although China Railway Corporation (CRC) mentionedthe official target might reach RMB4t, we doubt it will exceed themarket expectation, as the new line delivery target wonˇt increasefrom the 12th FYP.
Current valuation does not factor in downside risks
CRRC was trading around 11x P/E, vs its historical average of 15x,during 2H11-2014 when the market was disappointed by weakerthan-expected rail investment. We think it is very likely that CRRCwill derate to 12x P/E given more potential negative catalysts.
TP cut due to derating risk; reiterate REDUCE
We cut our TP to HKD6.52 by cutting our target valuation to 12x P/E,leaving our earnings forecasts unchanged. The next potentialnegative catalysts are CRCˇs guidance for 2016 rail investment andconsensus estimate cuts on CRRC.

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