麦格理关于中国铁路领域行业分析和投资策略

Pleaserefertotheimportantdisclosuresandanalystcertificationoninsidebackcoverofthisdocument,oronourwebsite–Beijing-ShanghaiHighSpeedcasestudy13ChinaRailwayConstructionCo19GuangshenRailway23ZhuzhouCSRTimesElectric26ChinaRailwayGroup28ChinaCommunicationsConstCorp32ChinaSouthLocomotive34DaqinRailwayCompany37AppendixI:High-speedrailwayprojectconstructionsummary39AppendixII:Backgrou[e-mail]@[e-mail]marketSolidearningsgrowthdoesnotdeserveunderperformanceChinarailway-relatedstocksunderperformedthemarketin1H09.Wedidnotseeanysignificantearnings-multipleexpansioninthesector.Wethinkthesector’svaluationremainswell-supported,withprojectedsolidearningsgrowthforthenextthreeyearsfromgovernmentspending.Amonglargecaps,wepreferChinaRailwayConstruction(1186HK).Spendingtoremainhighin12thfive-yearplan(2010–15)Acommonbeliefisthatthereisunlikelytobegrowthinrailwayspendingafter2010.Wedisagree,basedonthetargetedcompletionoftracklength,whichisslatedtoincreaseatahighergrowthrateafter2010alongwiththeassociatedfleetexpansionforrailvehicles.Weestimatetotalrailwayspendingunderthe12thfive-yearplan(2011–15)couldtopRmb3.25tr,whichwouldbea40%increaseoverthe11thfive-yearplan.Wethinkspendingislikelytopeakaround2012.Asidefromtheconstructionplaysinthesector,wealsohighlightZhuzhouCSRTimesElectric(3898HK)asthebestplayintherailwayequipmentsegmentatthecurrentshareprice.Thenexttheme–tariffreformandassetprivatisationPassengerrailtariffshavenotbeenadjustedinthelast12yearsandhavebeensubsidisedbyfreight.Wethinkachangetoamore-flexibletariffregimeislikely–onethatcouldbeadjustedbymarket-orienteddemand.Sucharegimecouldleadtoimprovedreturnsandabetterearningsoutlookforpassengerrailassets,inourview.Itwouldalsoenablethegovernmenttoprivatisegood-qualityassetstoattractprivatecapitaltofinanceitsplannedlargerailwayspendingafter2010.WethinktheonlyplayinthisspaceisGuangshenRailway(525HK),whichwebelievewouldbenefitfromhigherpassengertariffsandpotentialassetinjections.KeyrisksFluctuationinrawmaterialcostsisamajorrisktorailwaynetworkdevelopmentcostsandwouldcertainlyhaveaneffectonconstructioncompanies.ThepricingstructurewaschangedinOctober2008toafixed-pricecontractwithanescalationclausefromtheoldcost-plusmodel.Otherrisksoverthemediumtermarethetimingoftariffreformsandinterest-ratechanges.Chinarailwaysector–valuationsummaryCompanyStockcodeRecPrice(HK$)TP(HK$)Upside/downsideFY09EPER(x)FY09EV/EBITDA(x)CRCC1186HKOP11.913.614%21.17.5CRG390HKUP6.35.0-20%23.610.1CCCC1800HKN9.19.65%15.58.6ChinaSouthLoco1766HKN4.54.3-4%26.210.2ZhuzhouCSR3898HKOP11.012.312%19.614.6GuangshenRailway525HKOP3.75.036%17.48.5DaqinRailway601006CHUP10.37.0-32%21.711.1Sharepricesasof30June2009.Source:Bloomberg,MacquarieResearch,July2009MacquarieResearchEquities-ReportChinarailwaysector6July20092Fig1AsiaPacificregionalconstructioncompanyvaluationcomparisonLastpriceTPMktcapPEREBITDAmarginEV/EBITDACompanynameStockcode(lcy)(lcy)Upside(US$m)2008A2009E2010E2008A2009E2010E2008A2009E2010EDownerEDIDOWAUOP5.394.93-8.5%1,42011.310.611.37.3%7.4%7.7%6.15.75.8LeightonHoldingsLEIAUUP22.3520.65-7.6%5,30110.411.111.89.1%8.2%8.6%5.44.84.7UnitedGroupLtdUGLAUN10.299.34-9.2%1,35212.011.112.47.1%6.0%5.8%8.87.78.0IVRCLIVRCINOP342.30369.007.8%94916.118.514.114.4%9.8%10.5%10.411.98.3Larsen&ToubroLTINOP1,576.501,487.00-5.7%19,01940.231.725.711.8%11.6%12.6%28.922.617.5PunjLloydPUNJINUP213.05142.00-33.3%1,33120.0-27.718.08.3%2.6%7.5%13.427.88.5GamudaGAMMKOP2.693.3524.5%1,52713.523.214.813.4%7.3%12.7%12.816.611.3IJMCorporationIJMMKOP5.656.4013.3%1,50515.622.016.218.9%17.3%18.1%8.19.98.2DaelimIndustrial000210KSUP62,60038,000-39.3%1,69029.69.912.76.9%6.5%5.4%11.57.99.7HyundaiE&C000720KSUP54,60042,000-23.1%4,70523.014.515.07.1%6.4%5.5%12.910.411.4GSE&C006360KSUP75,70035,000-53.8%2,9958.410.714.56.9%6.8%4.7%8.78.210.7HyundaiDevelopment012630KSUP43,60024,000-45.0%2,55015.519.317.011.0%12.8%12.8%12.912.911.7DoosanHeavyIndustries034020KSUP65,50035,000-46.6%5,337-158.215.112.610.0%9.1%8.6%42.113.310.8ChinaRailwayConstructionCorp1186HKOP11.9413.6014.0%19,00835.521.117.04.0%4.5%4.8%10.98.96.6ChinaRailwayGroup390HKUP6.355.00-29.1%17,45288.023.519.12.8%4.0%4.0%19.610.911.9CCCC1800HKN9.229.604.1%17,63719.815.513.28.6%8.0%7.8%9.99.17.9ChinaStateConstrIntl3311HKOP2.813.4021.0%88614.012.410.76.2%5.8%5.8%8.77.36.4Marketweightedaverage26.218.716.37.6%7.4%7.7%12.710.39.1Note:Sharepricedataasof26June2009Source:Bloomberg,MacquarieResearch,July2009Fig2Internationalrailway-relatedcompanyvaluationcomparisonMktcapPriceTP07–10EPSPER(x)P/BV(x)EV/EBITDAStockCodeCompany(US$m)(lcy)Rec(lcy)UpsideCAGR(%)FY08AFY09EFY10EFY08AFY09EFY10EFY08AFY09EFY10EUS/EuroperailmanufacturerSIEGRSiemensAG62,27848.99N49.000.0%3.924.111.111.11.31.41.35.86.16.4BBD/ACNBom