2025-05-19-Jefferies-京沪高速铁路股份有限公司（601816）_自有线路和跨线业务增长依然乏力；下调评级至持有_10页_252kb

Equity Research Summary: Beijing-Shanghai High-Speed Railway (601816 CH)

Key Rating and Analysis Update

• Downgrade to HOLD from Buy due to declining business growth, competition, and weak macroeconomic conditions. Previous rating was changed to a more cautious stance.
• Price Target: Rmb6.00 (down from Rmb7.00), based on a target 2025E P/E multiple of 22x, reflecting modest expectations.

Business Growth Overview

• Self-Owned Line: Passenger traffic on Beijing-Shanghai HSR declined 2.3% YoY in 2024, with a slight recovery to 1.8% YoY in 1Q25. Capacity utilization fell to 66-67%, and premium services (business and first-class) saw declines, while second-class grew marginally. Avg ticket revenue per passenger decreased by 1%, impacted by competition from airlines and general economic weakness.
• Cross-Line Services: Journey km grew 11.4% in 2024 but slowed to 2% in 1Q25 due to weak demand. This slowdown mirrors broader regional declines in rail passenger traffic, reducing service additions by other operators.

Financial Highlights (FY24 & 1Q25 Results)

• Revenue decreased 12% YoY to Rmb42,157 million, gross profit margin dipped slightly to 47.4% (from 45.8% in 2024), while net profit fell 21% to Rmb12.768 billion.
• Key metrics: EBIT margin at 44.8%, net profit YoY change at -21%, and P/E ratio down to 23.1x.
• The market has been disappointed due to these declines, with no return to pre-COVID or pre-recession levels.

Potential Catalysts and Risks

• Upside Catalysts:
  • Jingfu Anhui Company's traffic growth reversing and profitability improving to first-time profitability in 1Q25.
  • New high-speed rail lines (e.g., Beijing-Xiongan-Shangqiu-Hefei) driving demand by 2026.
• Downside Risks:
  • Cross-line journey km and pax traffic growth below expectations.
  • Continued weakness in Jingfu Anhui's performance or new competition diverting traffic.

Valuation and 12-Month Outlook

• Base Case: Target price Rmb6.00; forecast revenue growth of ~4% CAGR from 2025-27, and EPS growth of ~10%, but cautious due to macro pressures.
• Bull Case: Price Rmb7.00 (P/E 25x) based on faster-than-expected traffic growth or profitable expansion in syndicates.
• Bear Case: Price Rmb5.00 (P/E 19x) due to demand misses or delays in infrastructure benefits.

Overall Recommendation

• The investment thesis emphasizes potential in cross-line growth and Jingfu Anhui but offsets this against near-term headwinds. The HOLD rating reflects reduced conviction and risk of slower recovery compared to market optimism.

Notes

• Issued by Jefferies on May 19, 2025; ticker symbol 601816 CH.