Daqin Railway (601006): Midstream Column Height Index of West Coal and East Transport Highlights Investment Value

Daqin Railway (601006): Midstream Column Height Index of West Coal and East Transport Highlights Investment Value

Investment suggestion: The Daqin Railway is an important channel for transporting coal from the west to the east. Although affected by multiple factors this year, we expect that the gradual traffic volume will remain stable.

In the medium and long term, the mismatch in coal production and sales and the “transit to iron” policy will support demand for rail freight.

In general, although the Haoji Railway has been officially opened to traffic, the short-term diversion impact is limited. The performance of the Daqin Railway is stable, the dividend payment rate is high, and it still has obvious investment value.

We expect the company’s EPS to be zero in 19-21.

93/0.

98/1.

01 yuan, corresponding to the current PE is 8.

1/7.

7/7.

5 times.

Measured by DDM evaluation model (internal value 8.

9 yuan), given a target price of 9 yuan, maintain “strongly recommended-A” rating.

南宁桑拿 Due to multiple factors since the early days, the transportation volume of the Daqin Line has changed, but coal demand is expected to resume in the fourth quarter.

The Daqin line is the company’s core asset, but this year, due to typhoons, cable failures, and changes in thermal power demand, the Daqin line will gradually complete its freight volume from January to August 20192.

9 billion tons, a reduction of 3 per year.

98%.

However, in the fourth quarter of the reorganization, the macro economy stabilized and recovered, hydropower ebb, and thermal power demand gradually recovered. It is expected that the overall freight volume will gradually remain stable.

The regional distribution of coal resources in the country is mainly concentrated in the “three western” regions. The mismatch of production and sales has replaced the basis of coal transportation demand.

China’s coal resources are concentrated in the “three western” regions (Shanxi, Shaanxi and western Inner Mongolia).

In terms of coal supply, in 2018, the previous raw coal output was 35.

4.6 billion tons, an annual increase of 5.

2%.

The total production of the three provinces and autonomous regions of Shanxi, Shaanxi and Mongolia.

4.3 billion tons, accounting for 68 of national output.

9%, the proportion of the previous year (67.

2%) increase by 1.

7 points.

While coal consumption is concentrated in the eastern coastal areas, this mismatch in production and sales has formed the coal transportation layout of west coal transportation to east and north coal transportation to south.

It is expected that coal production capacity will increase further in the future and will be concentrated in the “Three West” regions, and coal transportation demand will further break through and improve space.

The railway reform continued to deepen, and the “powerhouse of transportation” benefited the railway sector.

At present, the Beijing-Shanghai high-speed rail officially launched the A-share listing work.

At present, the total iron debt ratio remains high, and high-quality railway assets are listed. It is expected to optimize the defect structure and enhance economic efficiency.

We expect that the securitization of high-quality railway assets will continue to advance in the future.

In addition, recently, the Central Committee of the Communist Party of China and the State Council issued the “Outline for the Construction of a Strong Country in Transportation”.

Relevant policies continue to benefit the railway industry, and high-quality railway assets such as the Daqin Railway are expected to fully benefit.

Risk reminder: The macro economy exceeds expectations, the Haoji railway diversion exceeds expectations, and the “transit to railway” policy fails to meet expectations