The operations of industry giant CRSC (688009.SH) are also under pressure. On the evening of February 25, the performance report released by CRSC showed that in 2023, the company's operating income and net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") were 37.140 billion yuan and 3.468 billion yuan respectively. Compared with the same period last year, both declined slightly.A reporter from the Changjiang Business Daily found that since 2018, CRSC's annual operating income has exceeded 40 billion yuan. In 2023, its operating income fell below 40 billion yuan for the second time after 2021. Net profit also fell for the second time since 2013. The last time was also in 2021.CRSC is the main force in China's rail transit construction, providing control systems and equipment for high-speed rail, rail transit, etc. According to the 2023 semi-annual report, more than 95% of China's core train control technology and equipment for high-speed railways that have been put into operation are provided by CRSC.For CRSC, technology is the primary productive force, and the connotation of this sentence is even more profound. The company adheres to independent innovation and owns approximately 3,900 registered patents, achieving completely independent intellectual property rights and 100% product independence in the core technology of train operation control.It is worth mentioning that CRSC is backed by China Railway Group, which has always been the company’s largest customer.Net profit fell for the second time in the past 11 yearsCRSC's operating performance once continued to grow steadily, but has begun to fluctuate in the past two years.According to the latest performance report disclosed, in 2023, CRSC's operating income was 37.140 billion yuan, a year-on-year decrease of 3.063 billion yuan, a decrease of 7.66%. Net profit was 3.468 billion yuan, and net profit after non-recurring gains and losses (hereinafter referred to as "non-net profit deducted") was 3.247 billion yuan, a year-on-year decrease of 166 million yuan and 170 million yuan respectively, with a decrease of 4.55% and 4.96%.CRSC was established in 2010. In 2015, it was listed on the Hong Kong Stock Exchange. In 2019, it was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange.Looking purely at operating performance, from 2013 to 2020, the company's net profit continued to grow, from 1.260 billion yuan to 3.819 billion yuan. During this period, except for a 3.65% decrease in 2020, operating income increased in all other years. Among them, in 2019, operating income reached 41.646 billion yuan, breaking the 40 billion yuan mark for the first time. In 2020, although there has been a decrease, it still exceeded 40 billion yuan, reaching 40.124 billion yuan.In 2021, CRSC experienced a double decline in revenue and net profit for the first time. They were 38.358 billion yuan and 3.275 billion yuan respectively, a year-on-year decrease of 4.40% and 14.25%. In 2022, operating income and net profit will rebound to 40.220 billion yuan and 3.634 billion yuan respectively, a year-on-year increase of 4.85% and 10.96%.To sum up, in the 11 years from 2013 to 2023, CRSC's net profit has only declined in two years, except for 2021, which is 2023.Starting in 2018, the company's operating income exceeded the 40 billion yuan mark, but in 2021, it fell below 40 billion yuan, and in 2023, it fell below 40 billion yuan again.Why did CRSC's operating income and net profit double drop again in 2023? In the performance report, the company did not provide an explanation.In the first three quarters of 2023, the company's operating income and net profit were 24.684 billion yuan and 2.566 billion yuan respectively, a year-on-year decrease of 8.39% and 1.35%. From this point of view, the year-on-year decline in net profit in the fourth quarter slightly expanded.Of course, although operating income and net profit have declined, they have remained basically stable overall.CRSC said that from the perspective of the global railway industry, international railway infrastructure construction will still be at a high level, but technology, markets, resources, etc. will continue to be concentrated in leading enterprises. The trend of protectionism in the European and American markets has become increasingly obvious, superimposed on the international situation. With the changes, the competition in the international market has become more intense. It is expected that the infrastructure construction of the domestic railway industry will remain at a relatively high level in recent years.The operating income structure in the first half of 2023 shows that 96.47% of CRSC’s operating income comes from China.Authorized 1,902 invention patents to promote independenceShort-term fluctuations in revenue and net profit have put pressure on CRSC's operating performance, but at least they have not changed its short-term fundamentals. Because the company insists on independent research and development.According to the financial report disclosure, CRSC's core business is rail transit control systems and its derivative businesses. It also carries out rail transit supporting project construction business, municipal informatization and supporting project general contracting business, and overseas rail transit construction-related businesses. The core technology threshold of the rail transit control system industry is characterized by high basic elements, so the technical requirements are relatively high.CRSC takes technology research and development as its core and uses technological innovation to promote the sustainable development of the overall business. The company said that since its establishment, it has been deeply involved in the field of rail transit control systems, relying on its outstanding technological innovation capabilities and possessing a number of industry-leading core technologies. As of the end of June 2023, the company has 3,901 registered patents in China, including 1,902 authorized invention patents.According to disclosures, the company has at least 32 core technologies such as train operation control technology and automatic and driverless train technology. These technologies are all independently developed.Based on the above technologies, CRSC has achieved complete independent intellectual property rights in core train operation control technology and 100% autonomy in products, forming core technology for rail transit control systems with independent property rights and establishing its leading position in the industry.As of the end of June 2023, the company has invested 4,274 R&D personnel, accounting for 22.36% of the total number of employees.CRSC has gained a larger market share. The company provides products and services for the rail transit construction of China Railway Group, 18 railway bureaus, more than 40 cities, and many factories and mining enterprises . More than 95% of China's high-speed rail core train control technology and equipment that have been put into operation are provided by CRSC. The company occupies about 40% of the domestic market share of urban rail transit control systems.China Communications claims that the company is China's leading urban rail transit control system solution provider, and its ultra-high market share has laid the foundation for the company's future efforts in the renovation and operation and maintenance markets.On January 19 this year, CRSC issued an announcement of winning bids for important projects. From November to December 2023, the company won a total of 10 important projects, with a total bid amount of 3.064 billion yuan.
