报告名称：China City Railway Transportation Tech(01522.HK)Profit warning not a surprise; T
报告类型：港股研究
报告日期：2016-01-27
研究机构：广发证券(香港)经纪有限公司
股票名称：C CITYRAILTEC,中国城市轨道科技
股票代码：08240,01522
页数：4
简介：What’s new?
CCRTT (1522 HK, Buy) issued a profit warning on Jan 22, expecting FY15 net profit to comein lower than FY14 mainly due to the following two reasons: 1) as a result of changes inaccounting periods, FY14 results covered the 18 months ended Dec 2014, while FY15 resultsonly covered the 12 months ended Dec 2015; 2) the tender for some major design andimplementation of application solution service projects has been delayed.
Our comments:
We think that the profit warning should not come in as a surprise to the market which hasbeen aware of both of the factors mentioned above. The company reported net profit ofHK$65m in FY14, with restated FY14 net profit of HK$40m (for the 12 months ended Dec2014). Our FY15 net profit forecast of HK$54m is 7.6% lower than market consensus, andhas already factored in the negative effects of the tender delays.
We suggest investors should focus more on the company’s earnings performance in FY16.The company announced a JV agreement with Beijing Mass Transit Railway Operation on 5Nov 2015, with more details to be unveiled. In addition, management expects the delayeddesign and implementation of application solution service projects to be put out to tenderagain in 2016, which should have a significant positive impact on the company’s 2016earnings. As such, we maintain our FY15 and FY16 net profit estimates of HK$54m andHK$96m respectively.
That said, recent global market turmoil may reduce investors’ risk appetite for small-capstocks, with potential increases in liquidity risk or country specific risk. Based on our adjustedDCF model where the risk premium assumption is raised from 9% to 10% and otherassumptions are kept unchanged, we lower our target price from HK$2.7 to HK$2.4, whilemaintaining our Buy rating for the stock.
Risk factors:
Key downside risks include slower-than-expected asset injections, and delays in Beijing’s cityrail system development.

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