FIRST SHANGHAI: Maintains "Buy" rating on Zhuzhou CRRC Times Electric (03898) with a target price of 55 Hong Kong dollars.

FIRST SHANGHAI released a research report stating that it maintains a "buy" rating on Zhuzhou CRRC Times Electric (03898) with a target price of 55.0 Hong Kong dollars. The bank expects the company's revenue to be 27.8 billion/30.9 billion/34.6 billion yuan from 2025 to 2027, with growth rates of 11.7%/11.1%/12.0%; and net profit to be 4.1 billion/4.58 billion/5.06 billion yuan respectively with growth rates of 10.7%/11.8%/10.4%. The main points of FIRST SHANGHAI are as follows: - The performance in the first three quarters of 2025 is stable - Revenue is 18.83 billion yuan, a year-on-year increase of 14.9%; net profit attributable to mother is 2.72 billion yuan, a year-on-year increase of 10.9%; non-GAAP net profit is 2.61 billion yuan, a year-on-year increase of 30.9%. In terms of business segments: the rail transportation business achieved revenue of 10.31 billion yuan, a year-on-year increase of 9.2%; the revenue of Beijing Emerging East Aviation Equipment business reached 8.43 billion yuan, a year-on-year increase of 22.3%, with basic components revenue of 3.84 billion yuan, a year-on-year increase of 30.4%, new energy generation revenue of 1.59 billion yuan, a year-on-year increase of 25.3%, and new energy vehicle electric drive revenue of 1.87 billion yuan, a year-on-year increase of 9.3%. The comprehensive gross profit margin of the company in the first three quarters of 2025 increased by 3.1 percentage points year-on-year to 32.4%, mainly due to changes in the revenue structure. - Stable growth in rail transportation business, maintenance ratio increase, rapid growth in new business - National railway passenger volume repeatedly hitting new highs, driving the high-speed bid for the 25-year EMU exceeding expectations, with continuous delivery of orders driving stable performance growth. The policy of replacing old with new engines has gradually eliminated old diesel locomotives from the market, bringing continuous incremental demand to locomotives. In the first three quarters of 2025, the maintenance business accounted for about 22% of rail transportation revenue, showing rapid growth compared to the same period last year, and optimistic about the release of maintenance demand for national railways and urban railways. In addition, the company continues to expand into new areas in the rail transportation field, with rapid growth in income from communication signals and other rail transportation equipment, which is expected to form a new growth pole. - The new semiconductor factory is fully operational, and the trends in new energy generation and automotive electric drive are positive - The Yixing new factory reached full production capacity of 30,000 pieces/month in the first three quarters of 2025, achieving high-speed revenue growth. The progress of the Zhuzhou 8-inch silicon carbide production line equipment is advancing, and it is expected to achieve production line commissioning by the end of 2025. The new energy generation business unit operates independently and has achieved slight profitability. It will expand its business in photovoltaics and energy storage PCS through cooperation with CRRC and Zhuzhou in the future. The automotive electric drive cooperation with mainstream automakers has stabilized in the top tier, achieving new breakthroughs with Chery, SAIC, etc., with a significant increase in delivery volume in Q3 2025.