QuickComment:ChinaRailwayCorporation(CRC)recentlystartedtenderingfornewequipmentorders,withtheoverallsizebelowmarketexpectationwhileinlinewithourestimate.Thetotalnewordervalueformultipleunits(MU),locomotives,freightwagonsandpassengercarriageswillbeRmb54bnin2H13,butpartoftheneworderswillbedeliveredin2014.CoreproductMUsnewordersizeis159standardsets,whichisatthebottomofmarketexpectationof150-290standardsets.
WemaintainourviewthatMUdemandwilldeclinein2013,giventheindustryisstilldigestingtheexistinghigh-speedtrainsoversupplyandthenewHSRlaunchisbehindschedulein2013.Moreover,locomotivedemandwilllikelyalsodeclinein2013,hurtbyChinaRailwaysweakfreighttransportation.WeremaincautiousonCSRandTimesElectric,andexpectconsensusestimatestobefurtherreviseddown.
What'snew:CRCannouncedthenewordertendersforrollingstockproductsinitssubsidiaryCRICswebsite.
Detailsareasbelow:1)MUs:CRChasstartedthetenderingof318setsofcommutationequipment(CIR)forMUs.ThisimpliesCRCwillstart159setsofMUssoon(onesetofMUsisusedpertwosetsofCIR).Weestimatethisincludes68setsof200km/hrMUsand91setsof300km/hrMUs,andtotalnewordervaluewillbe~Rmb24bn.
2)Locomotive:CRChasstartedthetenderingof1,079setsofCIRforlocomotives,whichimplies1,079unitsof6-axellocomotives(orcorrespondingto540unitsof8-axellocomotives).WeestimatethenewordervalueoflocomotiveswillbearoundRmb16bn.However,CRConlystarted6-axel7,200KWlocomotives(full-vehicle)ordertenderingof225unitsinthefirstround,whichisonly21%ofthetotal.Thisimpliesonlypartof1,079unitsoflocomotiveswillbedeliveredin2013.
unitsofpassengercarriages,includingthe25Tmodel(226units,ASP:Rmb5million/unit)andthe25Gmodel(500units,ASP:Rmb2.5million/unit).WeestimatethisorderstotalvalueisonlyaroundRmb2.4bn(CSR,whichhas50-60%marketshare,deliveredpassengercarriagesofabove2,000unitsin2013).
4)Freightwagons:CRCstartedthetenderingof28,900unitsoffreightwagons,whichisalsolowerthan40,000unitsin2013.
WeestimatethisordersvalueisaroundRmb11.6bn.
OnlyPartofMUsandLocomotivestoBeDeliveredin2013AlthoughCRCisgoingtostartthenewordertenderingof159setsofMUsand1,079unitsoflocomotives,weexpectonlypartoftheseorderswillbedeliveredin2013.WeexpectbothMUsandlocomotivesdeliveryvolumeswilldeclinein2013,whichwillleadtoamoderateearningsdeclineforbothCSRandTimesElectricintheyear.
WeprojectonlypartoftheMUsneworderof159setswillbedeliveredin2013,andtheindustrysdeliveryvolumewilldeclinefrom236setsin2012,forthebelowtworeasons:1)Severalhigh-speedrailwaylauncheswillbedelayeduntil2014,includingChengdutoLeshanat319km,ShenzhentoXiamenat502kmandNanjingtoAnqingat258km.Accordingtoourlatestsummaryandupdate,thereareonly1,251kmofHSRlinesand1,387kmrapidrailwaylineswillstartoperationin2013,lowerthan2,723kmofHSRlaunchedin2012(Exhibit3).
2)Existinghigh-speedrailwaysnewtrainsdemandremainslow.AccordingtoourrecentShanghaitrip(discussedwithanexpertfromCRCssubsidiary,ShanghaiRailwayBureau),althoughBeijingtoShanghaiHSRpassengertransportvolumegrewby21%YoYin1H13(1H12isstillthefirstyearofoperation),thelinedidnotaddnewtrainsduringtheperiod.TheexpertmentionedthattheycoulduseexistingMUstomeetpassengertransportationdemandinthenearterm,evenincludingpeakseason.
Thisismainlybecausetheystillhavethepotentialtoimprovesomeunderutilizedtrainsrunningfrequencythroughmoreefficientarrangements.