Guangshen Railway (601333): 3Q performance is worse than expected

Guangshen Railway (601333): 3Q performance is worse than expected 4Q passenger transport continues to under pressure performance or benefit from high growth of land deposits and deposits

3Q results were worse than our expected 3Q results: operating income 54.

US $ 2.6 billion, + 7% per year; operating costs + 13% per year, and gross profit fell 47% to 2.

65 ppm, gross margin ten years -5 ppt; net profit 成都桑拿网 attributable to mother 1.

13 ‰, -64% at the beginning of the year, corresponding to EPS0.

11 yuan; net profit margin 2.

1%, higher than -4.

1ppt, 1-3Q company achieved net profit attributable to mother 8.

75 ‰, the previous budget was 9%, and the profit was 0.

12 yuan.

The 3Q performance was lower than our expectation, mainly due to the increase in main operating costs over income, and the decrease in gross profit from operating leverage.

3Q business data differentiation.

Passenger transport: Affected by the reduction of through trains, the decrease in the number of passengers traveling to Hong Kong, and the shift of the Guangzhou-Shenzhen-Hong Kong high-speed rail diversion, the traffic shifts (reducing the distance of 7% of the total passenger sending volume, of which the direct passenger traffic decreased by 57%, and intercityTrain passenger volume decreased by 4%).

Freight: Better volume growth (total freight volume increased 12%, of which shipment volume increased 13%).

Development Trends We expect that 4Q passenger traffic will continue to be replaced.

1) The Guangzhou-Shenzhen-Hong Kong high-speed rail line has been open to traffic since 4Q last year. This year’s 4Q is relatively relatively affected by the high-speed rail diversion, but the increase in the number of passengers traveling to Hong Kong will continue to extend the Guangzhou-Kowloon through train.

2) From July to July, the Guangzhou-Kowloon and Buddha-Jiu trains have been reduced to slightly reduce train revenues.

3) Guangzhou-Shenzhen Intercity (Guangzhou East-Shenzhen Airport) is expected to open until November. We expect to have a certain diversion effect on the company’s Guangzhou-Shenzhen intercity vehicles, but due to the differences in Shenzhen station location, speed, etc., and diversionOr it will gradually manifest, so it is recommended to continue to observe the traffic flow of intercity vehicles.

Land development progressed in an orderly manner.

We expect that the first land deposit will be completed this year and contribute about 900 million yuan in profit after tax.

The development of the second piece of land is under review and approval. It is expected to complete the approval next year and proceed to the next development.

In addition, recent progress in the passenger transport sector for railway reforms is expected to boost sector estimates.

Earnings forecasts and projections maintain 2019/20 net profit forecasts18.

1 ‰ (without deduction + 9% YoY to 9 ‰) / 11.

300 million (deduction + 10%).

The current A-share contradiction corresponds to December 2019/2020.

6 times / 20.

3 times price-earnings ratio.

The current H share corresponds to December 2019/2020.

6 times / 20.

3 times price-earnings ratio.

The stock maintains a neutral rating and 3.

Target price of 52 yuan, corresponding to 13.

7x 2019 P / E ratio and 22.

2 times the 2020 P / E ratio, 9 compared with the same period last year.

0% upside.

H shares maintain a neutral rating and 2.

89 reached the target price, corresponding to 14.

4x 2019 P / E ratio and 23.2x 2020 price-earnings ratio, 12% upside from the current previous.

The progress of depositing and depositing risky land was slower than expected; inter-city passenger traffic was diverted from Guangzhou to Shenzhen.