CSR (1766 HK, HK$3.70) – Expect downside pressure

For FY12/08A, the revenue increased 30.9% YoY to RMB35,092.8m with net profit up 92.7% YoY to RMB1,685.6m. The gross margin widened 1.7 pcp YoY to 16.7% with net margin up 1.5 pcp YoY to 4.8%. The growth was mainly driven by EMU (up 112.0% YoY to RMB5679.6m), city rail (up 51.5% YoY to RMB2,574.2m) and others including train componet (up 118.7% YoY to RMB5,986.3m). However, for 1Q FY12/09A, the top line only increased 9.7% YoY to RMB7,375.0m while bottom line dropped 47.5% YoY to RMB192.8m. We think the 1Q results maybe affected by MoR's order delay.

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Zhuzhou CSR Times Electric (3898 HK, HK$8.02) - Meeting takeaways

Zhuzhou CSR Times Electric (3898 HK) held the investor meeting yesterday following the announcement of their FY12/08 results yesterday. We expect the street to revise up its earnings estimates for Zhuzhou on the company’s guidance. However, we think that the market may potentially be on the aggressive side. This is because that while management guides for gross margins to be stable in FY12/09A, we suspect there is continuing downside risk.

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China Automation Group (569 HK, HK$2.14) – Laggard in the offering

Sales increased 113.6% YoY to RMB861.7m with net profit up 49.3% YoY to RMB149.2m. The management guided that they currently have RMB980m order on hand and expect to secure RMB1,300m for 2009 with 60% order from railway sector. In 2009, the company would tap into the upstream petrochemical pipeline safety control business and take further M&A focusing on urban railway related company. CAG could be a laggard play in our view given the recent rally in niche counters. We have a Trading BUY call on the counter though we would suggest investors to observe how the counter opens trade today.

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China Railway Sector - CSR misses out on contract for 100 EMUs

Updated on Sunday, April 5, 2009 at 8:37AM by VAYUE.com Team

According to Sina news (article), Siemens confirmed that it has signed a deal with subsidairies of China North Locomotive and Rolling Stock Group (CNR), Tangshan Railway Vehicles Co. Ltd. and Changchun Railway Vehicles Co. Ltd., and the Chinese Academy of Railways to supply components including electrical equipment and chassis to the project. The total contract value for the 100 EMUs was RMB46.1b, with RMB6.9b (EUR750m) for Siemens and RMB39.2b for CNR.

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