Daqin Railway (601006): Traffic volume recovers to high level in March and spring maintenance in April

Daqin Railway (601006): Traffic volume recovers to high level in March and spring maintenance in April

Event: The company released operating data for March 2019. The core operating assets of the Daqin Line completed a cargo transportation volume of approximately 3885, a decrease of 0.

64%, the average daily volume is 125.

32 inches.

From January to March 2019, the Daqin Line gradually completed the largest cargo transportation volume of 10,971, a decrease of at least 3.

72%.

The daily consumption of power plants has picked up, inventory has fallen, and port inventory fluctuations have fluctuated within a healthy range. The average daily traffic volume of the Daqin Line has returned to 125 and set a high level.

The average monthly coal inventory of the six major power generation groups in March reached US $ 1,619, a decrease of 4% month-on-month, and the daily consumption quickly recovered to normal levels (the average monthly rate in March was 66.

48 initially, at least + 4%), until April 8th, factory inventory continued to drop to levels around 1550, freeing up space for coal transportation demand.

In March, the coal inventory at Qinhuangdao Port averaged 595 tons, an increase of 12% month-on-month, and a continuous deviation of 9%, which kept changing within a healthy range. As a result, the daily average transportation volume of Daqin returned to more than 125, and the transportation volume resumed high operation.

From January to February of 19th, the output of raw coal in Shaanxi dropped, and the increase in production capacity was concentrated in Shanxi.

From January to February 2019, the raw coal production in Shanxi grew steadily, increasing by 8% each year; the raw coal production in Inner Mongolia increased further4.

3%; Shaanxi raw coal output fell by 15% year-on-year.

1%, mainly due to 1.

12 After the Shaanxi Shenmu Coal Mine accident, the coal mines in Yulin City with a designated production capacity of 45 or less per year were suspended for rectification. The current resumption procedures are strict. It is expected that coal supply in Shaanxi will remain tight in the short term.

In January-February, the total output in the Sanxi area increased by 1%, and the throughput increase was significantly concentrated in Shanxi.

In April, the Daqin Line ushered in spring maintenance. In 19 years, the coal supply and demand structure is expected to be weakly balanced. The Daqin Line’s traffic volume is expected to continue to maintain a high level.

On April 6-30, the Daqin Line will begin centralized maintenance in the spring, during which the daily Qinhuangdao line will complete the daily shipment volume from 125 to 105-110 instead.

We believe that the overall coal supply in 19 years will be slightly released but relatively limited. The main supply increase will still be concentrated in the Three Western Regions. Imported coal will decline. The overall demand for coal will be stable. The coal supply and demand structure will remain weakly balanced.It is expected to remain high in 2019.

Investment suggestion: Against the background of the favorable supply 杭州桑拿 and demand pattern of public iron and coal, the company’s performance is highly certain, and it is expected to maintain a dividend rate of more than 50% and an expected rate of return of 5.

8%.

The company’s EPS for 2018/2019/2020 is expected to be 0.

99/1.

02/1.

03 yuan, PE is 8.

7x, 8.

4 times, 8 times

3x, maintain “Buy” rating.

Risk warning: coal demand is lower than expected, the macro economy is down, and the volume of transit to rail transportation is lower than expected