Investment Highlights:

The quality of operation of China Railway Group has improved, and the total profit has reached the highest level in history. In 2024, the total transportation revenue of the national railway will be 990.18 billion yuan, an increase of 2.7% over 2023, and the total profit will reach the best level in history. In 2024, the total investment in fixed assets of the national railway will reach 850.6 billion yuan, a year-on-year increase of 11.3%.

Passenger traffic: In December, the number of railway passengers dispatched nationwide reached 297 million, a year-on-year increase of 2.6%; From January to December, the number of railway passengers sent across the country reached 4.312 billion, a year-on-year increase of 11.9%, and the annual passenger volume exceeded 4.3 billion for the first time. In 2024, 3.272 billion EMU passengers will be dispatched, accounting for 75.9% of the country's railway passenger traffic, a year-on-year increase of 12.9%.

With the start of the Spring Festival transportation of railways, the national railway is expected to send 510 million passengers, with an average of 12.75 million passengers per day. From January 14 to February 22, a period of 40 days, before the Spring Festival, the national railway concentrated on the use of 185 groups of newly built 350 kilometers per hour Fuxing EMUs, and the transportation capacity was effectively expanded; The national railway arranges more than 14,000 passenger trains per day, which can increase by 500,000 seats per day, and the passenger capacity has increased by about 4% year-on-year.

Freight volume: In December, the national railway freight dispatch volume was 459 million tons, a year-on-year increase of 5.4%; Among them, the national railway freight delivery volume was 354 million tons, a year-on-year increase of 3.8%. From January to December, the national railway freight dispatch volume was 5.175 billion tons, a year-on-year increase of 2.8%; Among them, the national railway freight delivery volume was 3.985 billion tons, a year-on-year increase of 1.9%.

China Railway Group issued the "Action Plan for the Renewal and Transformation of Railway Equipment" to promote the renewal and transformation of railway equipment.

(1) Renovation and transformation of transportation and production equipment, improve the safety and reliability of line equipment in the system, strengthen and improve the quality level of electrical and power supply equipment, promote the renewal and green replacement of old locomotive equipment, and strengthen the renewal and transformation of fire protection, elevators and other equipment; (2) Upgrading of transportation service equipment, we will continue to strengthen the upgrading and transformation of passenger transport equipment, and continuously improve the service function of logistics equipment; (3) The independent substitution of information and communication equipment will accelerate the application and replacement of Beidou main equipment, and promote the upgrading of wireless communication equipment in an orderly manner; (4) The promotion and application of green and low-carbon equipment will accelerate the optimization of equipment energy consumption structure and continue to strengthen the ability of equipment pollution control and emission reduction; (5) Efficient recycling of existing equipment, efforts will be made to improve the level of equipment operation and maintenance management, and reasonable arrangements for the use of old mobile equipment.

Investment suggestion: the demand for national railway passenger traffic and freight volume continues to improve, combined with the support of equipment renewal policies, we believe that the national railway equipment, especially the rail transit vehicle (EMU, locomotive) industry chain, is expected to continue to improve. CRRC (601766. SH), Times Electric (688187. SH), Times New Materials (600458. SH), Yonggui Electric (300351. SZ), Thinking Train Control (603508. SH）。

Risk warning: the growth of national railway passenger traffic is less than expected, the growth of freight volume is less than expected, the investment of national railways is less than expected, and the bidding of railway equipment is less than expected.