China Machinery Railway Equipment Data update post broadly in line 2Q results

Equity Research 20 August 2026 | 8:11PM HKT

CHINA MACHINERY: RAILWAY EQUIPMENT

Data update post broadly in line 2Q results

On Aug 19 post-market close, CRRC and Times Electric reported 1H26 results Jacqueline Du | broadly in line. CRRC’s EBIT beat was mainly from lower SG&A rather than GPM Goldman Sachs (Asia) L.L.C. expansion; railway equipment/new industries grew +12%/+12% yoy, overseas revenue grew +22% yoy, while new orders were broadly flat/slightly down. Times Electric delivered steady rail growth and strong auto/marine, but semiconductor profit pressure and renewables weakness capped earnings.

We keep CRRC 2026E-2030E revenue forecasts unchanged but revise EBIT by +1%~2%. For Times Electric we tweak down 2026E-2030E revenue and EPS both by c.1% on pressured semiconductor profitability. Our 12m TPs move to HK$6.4/Rmb5.8 for CRRC-H/A (vs. HK$6.3/Rmb5.7 previously) and Rmb50.5/HK$37.0 for Times Electric-H/A (vs. Rmb50.6/HK$37.1 previously). Maintain Buy/Neutral on CRRC-H/CRRC-A (H-share still at attractive 2026E dividend yield of 5.02%) and Neutral on Times Electric-H/A.

The author would like to thank Zhou Li, Hao Chen, Zhihan Ye and Junfang Zhang for their contribution to this report.

On Aug 19th post market close, CRRC reported 1H26 revenue/operating profit/net profit at Rmb131.68bn/Rmb11.16bn/Rmb7.99bn, +10%/+20%/+10% yoy and +3%/+27%/+3% vs. GSe; implied 2Q26 revenue/operating profit/net profit came in at Rmb77.86bn/Rmb6.46bn/Rmb4.61bn, +10%/+13%/+10% yoy and +4%/+57%/+6% vs. GSe where the EBIT beat mainly on lower SG&A rather than GPM expansion. Railway equipment/new industries grew +12%/+12% yoy, overseas revenue grew +22% yoy, but new orders were broadly flat/slightly down at Rmb141.9bn vs. Rmb146.0bn in 1H25, or -2.8% yoy, with overseas orders at Rmb29.9bn vs. Rmb30.9bn, or -3.2% yoy. On margins, 2Q26 GPM/OPM/NPM were 21.2%/8.3%/5.9%, +0.5pp/+0.2pp/0pp yoy and -1pp/+3pp/0pp vs. GSe; OCF weakened to -Rmb16.1bn vs. -Rmb9.0bn on procurement and delivery timing, while interim DPS was maintained at Rmb0.11/share.

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Goldman Sachs China Machinery: Railway Equipment

We keep CRRC 2026E-2030E revenue forecasts unchanged but revise EBIT by +1%~2% on cost-control. Accordingly, our 12m TPs for CRRC-H/A move to HK$6.4/Rmb5.8 from HK$6.3/Rmb5.7, still based on 2026E P/Es of 11X/11X. Maintain Buy on CRRC-H, supported by stable dividend visibility and a 2026E dividend yield of 5.02%, and Neutral on CRRC-A with fair valuation.

Exhibit 1: CRRC 2Q26 financial summary

Prior 2Q26 CRRC (601766.SS/1766.HK) 2Q25 3Q25 4Q25 1Q26 2Q26 yoy% qoq % 2025 yoy% Diff % GSe

Revenue (Rmb mn) 71,087 64,107 89,198 53,819 77,864 10% 45% 273,063 11% 74,641 4% By business segments Railway Equipment 33,920 28,020 35,881 29,120 37,802 11% 30% 123,608 12% na na Locomotives 7,442 6,951 13,007 3,293 7,407 0% 125% 29,706 26% na na Passenger carriages 3,874 1,607 2,535 2,678 4,186 8% 56% 8,535 35% na na Freight wagons 2,956 4,241 4,542 3,585 5,764 95% 61% 16,943 -6% na na Multiple units 19,638 15,221 15,807 19,564 20,445 4% 5% 68,423 10% na na Urban rail and infrastructure 10,219 9,886 14,802 6,709 10,884 7% 62% 42,090 -7% na na Modern services 1,120 847 1, % 50% 4,245 2% na na Emerging industry business 25,828 25,364 37,024 17,343 28,204 9% 63% 103,121 19% na na Gross profit (Rmb mn) 14,723 13,041 19,214 12,816 16,504 12% 29% 58,379 11% 16,421 1% EBIT (Rmb mn) 5,723 3,403 3,186 4,699 6,463 13% 38% 14,487 21% 4,105 57% Net profit (Rmb mn) 4,193 2,719 3,217 3,378 4,612 10% 37% 13,181 6% 4,360 6% EPS (Rmb) % 37% 0.46 6% 0.15 6% Gross margin (%) 20.7% 20.3% 21.5% 23.8% 21.2% 0.5pp -2.6pp 21.4% 0pp 22.0% -1pp EBIT margin (%) 8.1% 5.3% 3.6% 8.7% 8.3%…