China train maker CRRC disappoints with 2pc profit growth in first half

CRRC Group, China’s biggest train maker and only manufacturer of high-speed trains, missed market expectations with a 2 per cent rise in net income for the first half of the year.

The company posted net income of 4.79 billion yuan for the six months ended June 30 this year, up 2.04 per cent year on year, from 4.7 billion yuan a year earlier, according to a company statement released on Monday. The figure missed market expectations of 4.83 billion yuan in profits in a survey by Bloomberg.

The revenue for the same period reached 92.3 billion yuan, 0.55 per cent higher year on year. Earnings per share were 0.18 yuan, compared with 0.17 a year earlier.

The Chinese government previously merged former train makers CSR Corp and China CNR Corp to form CRRC in a bid to better compete with overseas competitors.

The company’s share price fell 2.2 per cent in Hong Kong to close at HK$7.23 on Monday. The shares in Shanghai fell 2.4 per cent to 9.49 yuan, extending the declines this year to 26 per cent.

“The company’s revenue is below our expectations, due to delayed procurement from China Railway Corporation,” said Jiao Yiding, an analyst from China Merchants Securities (Hong Kong).

CRRC announced that its first joint venture plant in India began operations on Saturday, the company’s first plant in South Asia.

Despite that news, “generally speaking, we are not positive about the company’s performance for the whole year of 2016, due to slow confirmation of overseas contracts,” added Jiao.

JP Morgan also holds a negative view on the train maker. Earlier this month the bank lowered its 2016/17 earnings forecast for CRRC by 7 per cent and 5 per cent respectively due to postponement of procurement that is expected to have a negative impact on the company’s deliveries this year. JP Morgan lowered the target price to HK$13 from HK$14, with a rating at overweight.