Demand for railway equipment will improve significantly in the second half

The delay in bidding for the Ministry of Railways has left the growth of vehicle purchases lagging far behind infrastructure investment, but this will improve significantly in the second half.　　Although the current industry listed company's average P/e ratio is higher than the market average, but as the market valuation level, the gap has been significantly reduced, but also the possibility of the second half of the plate lag greatly reduced.　　Lin Yu vehicle acquisition growth lags far behind infrastructure investment and speeding up railway construction makes the railway fixed assets investment speed up significantly in the first 5 months of this year, but the repeated postponement of bidding by the Ministry of Railways makes vehicle acquisition growth lag behind infrastructure investment. The amount of expenditure on vehicle acquisition and renovation is greatly decreased since the speed of railway construction was accelerated in China last November, the progress of railway projects has obviously accelerated and the investment in fixed assets has obviously increased. 2009 1-May railway fixed assets investment amount amounted to 168.969 billion yuan, an increase of 120%. Among them, the expenditure of locomotive and vehicle purchase and renovation is basically flat, the main contribution to the growth of fixed assets investment is mainly capital expenditure, although the proportion of locomotive and vehicle purchase and renovation on fixed assets investment in the whole railway is lower than that in our expectation, but this proportion fell below 12% in the first 5 months of this year, exceeding our expected 15　　%。 We think that the main reason for this phenomenon lies in two aspects, on the one hand, the repeated extension of the Ministry of Railways tenders, the original annual tender for the first time is generally completed in February, and now postponed until June, which led to a marked decline in demand for locomotives and vehicles in the first half of this year　　On the other hand, because of China's economic downturn accelerated the process of railway construction, which made the first half of infrastructure spending growth faster.　　Railway infrastructure investment may exceed expectations offline equipment growth faster this month, the Wen Railway was completed 8 months ahead of schedule, the Beijing-Shanghai line has been progressing smoothly this year, we think that the plan to complete the beginning of this year (600 billion yuan) is not a problem, and may even slightly exceeded. and benefiting from the acceleration in infrastructure investment, the relatively rapid growth in offline equipment (including in rail-specific equipment) this year, with revenues from the railway equipment industry rising by more than 60% per cent year-on-year in the first 5 months of this year, significantly faster than the increase in vehicle revenues. Although the first half of the offline equipment growth faster, but the listed companies involved in the offline equipment is not many, mainly the Times new materials and Jin billion industrial two, and this growth is basically within expectations.　　Acquisition of vehicles in the second half of this year, the first half of China's railway vehicle output, although there is a significant decline in passenger cars, but from the trend of decline in the locomotive and goods vehicles in the two quarter difference, the locomotive decline than the first quarter, and the decline of goods vehicles is significantly increased. We anticipate that with the Ministry of Railways Tendering, the Ministry of Railways's vehicle acquisition and renovation spending will begin to increase significantly in the second half of the year, is expected to increase the annual rate of this amount will be around 20%, locomotives, goods vehicles will be significantly smaller than the first half of the decline. In the third quarter after the completion of the bidding, the company believes that in the first half of the year, most of the time overcapacity will accelerate production, monthly production will quickly rebound to the historical average (4,000 vehicles) toThe second half of the EMU capacity is gradually released, the first half of the electric locomotive, diesel locomotive main models are also off-line, the second half will enter the production stage.　　And starting next year will gradually benefit from the acceleration of the railway construction of new vehicle demand, we expect next year locomotive and rolling stock demand will exceed 100 billion yuan. 1-May industry gross margin has a certain fall but the second half of the year will rebound in the first 5 months of the industry gross profit margin has come down, mainly due to the decline in capacity utilization and some of the lower domestic rate of the new locomotive.　　The beginning of the second half of the phenomenon will be significantly improved, gross margin will continue to rebound. 1-May industry gross profit margin fell, the whole car industry dragged down obviously this 1-May industry gross profit margin below 15%, than 1-February fell 1.5%. From the subdivision industry, the accessories industry's gross Profit margin is basically stable, mainly the whole car's gross profit margin, the overall gross profit margin appears must fall. We think the component industry's gross margin is stable because: first, because the spare parts industry capacity utilization rate is significantly smaller than the whole car; second, the accessories industry to the exposure of steel to be higher; third, the production cycle of accessories is relatively short, the cost of the decline is also relatively fast; four, The domestic rate of some products is still low. This makes the price of accessory products and vehicle prices as stable, the accessories industry's gross margin more stable.　　The second half of the profit margin is a big probability event, but the amplitude will not be too large from the following impact on the main factors of gross profit margin, we think the second half of the profit margin is relatively large, but not too large, the overall gross margin performance will begin to outperform accessories. In the third quarter, we believe that steel prices will continue to be relatively low, with the further economic recovery, steel prices in the four quarter may appear to rise, but the impact of the relevant railway equipment produced this year is not significant; the rebound in capacity utilization and the increase in localization rate will help to promote the overall gross profit margin But prices for some products may fall (such as goods vehicles), and this downward pressure is likely to shift part of the sector. The cost of the period will continue to fall affected by the economic downturn, the major producers of relatively strict cost control, coupled with the maintenance of low interest rates in the first 5 months of this year, the railway equipment industry period cost rate continued to decline, although not very large, but the first fall to less than 10%.　　This year's industry is expected to maintain the rate of this small decline in the trend. Maintain the industry sync big City-A's investment rating we think that the average P/E of the current industry listed companies is still slightly higher than the market average, however, as the overall valuation level of the market, the gap has been significantly reduced, which makes the possibility of continued stagnation of the second half of the plate will be greatly reduced, but in the short term the lack of obvious catalysts,　　So we still maintain the two quarter of the industry to synchronize the market-a investment rating. China Southern car: Due to the Railway ministry's bid postponed to June, which will make the company's top halfThe earnings of the year will not be too good (the increase would be significantly smaller than our projected increase of more than 35% a year), but the situation will improve markedly in the second half. We still maintain its annual growth rate unchanged.　　Medium-term strategy we have increased the company's investment rating to buy-B, the current price has reached our target price, we believe that the company's share price in the next year will fluctuate in the 5-6 yuan interval, small space, so downgrade its rating to overweight-A.　　West Axle: As part of the industry, the second half of the gross margin may be squeezed, coupled with the company in the high-speed axle market is unclear, maintaining a neutral-a investment rating.　　New Times: Although offline equipment growth faster, but the company's products Bridge support competition is fierce, we expect the product growth will not be too fast, coupled with the new 900 sets of wind turbine blades of the market development uncertainty, to maintain the nature of the investment rating of A. North Entrepreneurship: This year's car production has fallen sharply, but the military revenue may be due to the National Day Parade and raw material prices down and income, gross profit margin Zizhan situation.　　The company has the possibility of further injecting the group's assets, temporarily maintaining the investment rating of the sex-a. Tianma shares: The company's freight bearing products are also affected by the decline in demand, but wind power bearing production will undoubtedly enable the company to maintain rapid growth in performance.　　Maintain an investment rating of its overweight-a. Jin billion industry: By this year's high-speed rail fastener product volume pull, the company's high performance growth this year worry-free, but the German companies continue to participate in competition makes the company's high-speed rail fasteners continue to increase the possibility of a decline, we believe that the amount of the bid will be lower than market expectations. In addition, the company's general fastener business accounted for a larger, and relatively high proportion of exports, the current order has no obvious recovery; the company's automotive fasteners are still not profitable. Given the relatively large drop in revenue from the rest of the company's products except the HSR fastener, it should be given a slightly lower valuation level than the railway equipment plate, which is not attractive at present and maintains its neutral-a investment rating. Author Unit: Shun Securities