Medium and long-term railway
network planning made clear in the direction of the construction of the railway
network in China, compared to the world's major economies, the network
construction of our country has a huge space for development. Invested
(including in the eleventh five-year plan of railway infrastructure construction
and investment) will reach 1.5 trillion yuan, about four times that of 15 during
the period of investment.
High-speed passenger and freight overloading will be a future focus, with the
support of national policy in terms of core parts localization, domestic railway
accessories products will in the future the emu supporting and overloading
upgrade breakthroughs, we believe that the railway accessories company in the
future may have big rise space.
Adopts a system of quality certification, the ministry of railways form higher
trade barriers, any enterprise production of railway accessories products must
be certified by the quality of the ministry of railways, therefore once the
enterprise into the supply system of the ministry of railways, shows that the
enterprise product quality reached a very high level.
We selected the five railway accessories company, their business scope covers
infrastructure related accessories, accessories and railway tracks locomotive
vehicle accessories. Times new material products include bridge bearings, the CA
mortar and elastic element, basically can meet the railway construction from
early and mid to late investment demand different peak; Gem-year industrial
products is railway fasteners; Jin west axles, CSR times and tianma stock
products are railway locomotive vehicle accessories.
We estimate that 2009-2011 will be a railway accessories industry high-speed
development period, we like those who have the industry leading status, capacity
expansion, outstanding technical advantages of listed companies significantly.
So we recommend times new materials, the jin west axles, tianma shares and CSR
times; Due to overvalued, we give the market rating gem-year industrial
Investment in this paper,
Rapid economic growth to promote China's railway equipment industry of railway
transportation in China has been occupies an important position, 06 railway
about bear 34% 34% of the nation's passenger traffic and freight transport. With
the rapid development of China's economy, the railway infrastructure
construction has lagged behind the economic development of transport demand, and
directly lead to railway, strained and capacity shortage, more than 90% of the
lines in the seams, and the developed countries more than 1.5 times of operation
load. China's huge population base, and vast land area determines the importance
of railway transportation. At this stage of railway transportation has become
the transportation development mode of China's first choice, especially in the
context of energy prices, focus on development of railway transportation, the
low energy, low cost, long distance, large capacity and good safety
transportation mode has a realistic significance.
In this context, the country put forward to develop the railway transport,
therefore has issued a "long-term railway network planning", not only put
forward the construction of railway network and implementation for line, also
asked the domestic main technology and equipment at or near the international
advanced level. At present, China's railway technology and equipment level, on
the whole, has certain disparity with the developed country, the technology is
still at an early stage of high-speed emu. Medium and long term planning and
points out that the ministry of railways will be through the international
cooperation, integration of domestic resources and scientific research to
realize the localization of railway equipment as soon as possible.
High-speed passenger and freight overloading will become the future focus, with
the support of national policy in terms of core parts localization, domestic
railway accessories products will in the future the emu supporting and
overloading upgrade breakthroughs, we believe that the railway accessories
company in the future may have larger rising space, from the long term we liked
the small molecule.
We cover the 5 listed companies, in addition to private enterprises gem-year
industrial and tianma shares, the remaining three railway accessories listed
companies are belong to the larger company's parent company or group, which most
of the assets of the parent company is not listed, and the development of the
railway industry background, the demand for financing is very large, so we
estimate that there are some assets into the possibility of future.
Valuation and rating
In the early period of the railway construction has a strong demand for
construction machinery products, the demand of the railway accessories will be
released after 8 years, so we think that the 09 p/e ratio will be more
reasonable. In the future earnings is expected to rise sharply, railway
accessories listed companies in 2009, the average p/e ratio of 26.7 times,
slightly lower than the domestic machinery sector 34 times the level of 09 p/e
ratio. Under the background of the development of the railway industry, we
believe that the sustainable development of the railway accessories listed
companies will remain until after 2010, has a comparatively clear profit growth
prospects, so we think the railway accessories listed companies exist good
investment opportunities. To comprehensively consider the valuation of the
domestic equipment manufacturing industry, we believe that the domestic railway
accessories industry listed companies 09 30 times the dynamic price-earnings
ratio can reflect its reasonable value pricing.
We covered the five railway accessories listed company, is a new material, the
jin west axle age respectively, tianma co, gem-year industrial and CSR times
electric. Judging from fundamentals, we believe that the era of new material and
CSR times electric products, product structure and the independent research and
development ability, the strongest and the background of the two companies have
CSR group; In addition the jin west axle high-end business prospects are very
good, and have an armed group parent company background, the three companies in
the future will benefit most of form a complete set of high speed railway, so we
give 30 times the 09 goals p/e ratio. Tianma co has developed rapidly, but the
proportion of railway bearing business only account for less than 50% of
revenue, so we give the firm a 09 28 times the goal of the p/e ratio. Gem-year
industrial valuation is too expensive, we do not recommend.
Era as zhuzhou electric locomotive research institute restructured enterprises,
the level of new material on r&d are very outstanding, powerful research
strength to ensure the company's product line is very rich, and has already
covered from the early stages of railway infrastructure, mid rail construction,
and eventually the whole process of investment vehicles. We expect the company
07 and 08 earnings per share growth above 100%. Based on 09 30 times earnings,
we will target the price was 21.60 yuan, and maintain our outperform rating on
Jin west axle after completion of the purchase axle production capacity will be
280000, up from the current 120000 root root, axle products market share,
industry status and pricing power will result in a lot of ascension. We expect
the axle products of the company's domestic market share will increase from the
current 30% to 50% level, become the industry's absolute leading enterprises.
Based on 30 times the 09 goals p/e ratio, we will target price 29.70 yuan, and
maintain our outperform rating on the company.
Tianma co is a high-speed growth of the enterprise, with its research and
development ability, the technical advantages and outstanding management team,
through a series of acquisitions, the company in railway bearings and short
cylindrical roller bearing market share ranking the first in the industry. In
the next few years the company by capacity expansion and external acquisition
into the high-end bearings and machine tool market, we expect the company 07 and
08 profit growth of 41% and 41% respectively, 08 return on net assets of more
than 27%, it is expected that the company based on 09 28 times the goal of the
p/e ratio, we will target price 132.44 yuan, to maintain our outperform rating.
Gem-year industrial export business despite the export tax rebate and the
negative impact of the appreciation of the renminbi, but the domestic high-speed
railway construction has brought about great development for the company, in the
next few years the company to raise funds to expand production capacity and
develop new products, through developing the high-speed rail, electricity and
auto accessories products, 08 and 09 will be rapid growth. Based on 09 earnings
forecast, the company's p/e ratio has reached 35 times, now overvalued, rating
given synchronous the market rating for the first time.
CSR times product technology content is very high, but because of the future
companies will take time for new product research and development and debugging,
so 7 years sales growth will slow significantly. But with the support of
national policy in terms of core parts localization, we believe that the
company's products in the future in high power ac drive system and form a
complete set of the emu will make a breakthrough, the company's performance in
the future may have big rise space. Based on 30 times the 09 goals p/e ratio, we
will target price 16.20 yuan, the rating for the first time to give is better
than that of the market.