China Galaxy Securities has released a research report noting that the fifth-level maintenance tenders for this year are all for the CRH series of Harmony trains. The peak procurement period for these trains was between 2014 and 2016, and according to the maintenance schedule, they will enter their first or second round of fifth-level maintenance starting in 2026. The firm estimates that during the 15th Five-Year Plan period, the average annual market space for high-level maintenance could exceed 500 billion yuan, and it maintains a bullish outlook on the sustained high prosperity of the railway equipment sector. The railway industry's strong cycle is expected to continue, with railway investment likely to remain at elevated levels. The firm is consistently optimistic about the procurement of new EMU trains and high-level maintenance, which is expected to support the steady profit growth of railway equipment companies. Driven by the dual engines of rail transit and new industries, China Galaxy Securities is bullish on the medium-to-long-term stable operations of CRRC Corporation Limited (01766).
On August 6, the China State Railway Group issued a tender announcement for the second batch of high-level EMU maintenance contracts for 2026, with a total of 421.125 standard sets up for tender. China Galaxy Securities offers the following key perspectives:
High-Level EMU Maintenance Tenders Continue to Grow from a High Base
The recent tender from China State Railway for the second batch of 2026 high-level maintenance includes 161.125 sets for third-level maintenance, 105 sets for fourth-level maintenance, and 155 sets for fifth-level maintenance. Combined with the first batch of high-level EMU maintenance tenders from January this year (which included 185.375 sets for third-level, 103 sets for fourth-level, and 78 sets for fifth-level), the total annual tenders for the year amount to 346.5 sets for third-level, 208 sets for fourth-level, and 233 sets for fifth-level maintenance. In terms of volume, this year's two batches of high-level EMU maintenance tenders total 787.5 sets, an increase of 124 sets from the same high base period last year, second only to the peak in 2024. Structurally, the two tenders in 2026 have significantly increased the volume of third-level maintenance tenders (346.5 sets) compared to 2025 (90.25 sets), marking the third-highest level historically. The number of fourth-level and fifth-level maintenance tenders has decreased, down by 27.25 sets and 105 sets respectively compared to the same period last year. In terms of train models, all fifth-level maintenance tenders for this year are for the CRH series of Harmony trains, which saw their peak procurement from 2014 to 2016. According to the maintenance schedule, these trains will begin their first or second round of fifth-level maintenance from 2026.
High Prosperity in the Railway Industry is Expected to Continue
In the first half of 2026, national railway fixed asset investment reached 363.2 billion yuan, a year-on-year increase of 2.1%, continuing growth from a high base last year. 355.2 kilometers of new lines were put into operation, an increase of 16.5% year-on-year. In the first half of the year, national railways completed a passenger volume of 2.348 billion person-trips, a year-on-year increase of 5%, setting a new record for the same period. Freight volume reached 2.622 billion tons, a year-on-year increase of 2.5%. Against the backdrop of sustained strong railway passenger traffic and steady freight growth, the China State Railway Group has maintained high levels of tenders for various railway vehicles this year. Since the start of the year, the group has tendered for a total of 70 sets of 350 km/h EMU trains (compared to 68 sets in the same period of 2025), 67.375 sets of 160 km/h EMU trains (42 sets in 2025), 34,800 freight cars (exceeding the total for 2025), and 398 locomotives (455 units in 2025). Based on the firm's analysis of railway lines, it is estimated that the average annual new mileage put into operation from 2026 to 2028 will exceed 3,000 kilometers, with 2027 being the peak year for commissioning. This suggests that new EMU train tenders are expected to remain high over the next three years. Concurrently, EMU maintenance is progressing according to the established schedule, entering a period of volume expansion starting in 2024. The firm calculates that the average annual market space for high-level maintenance during the 15th Five-Year Plan period could exceed 500 billion yuan, and it maintains a positive outlook on the sustained high prosperity of the railway equipment sector.
Bullish on CRRC's Steady and Sustained Profit Growth
According to the 15th Five-Year Plan of the China State Railway Group, the national railway operating mileage is targeted to reach approximately 180,000 kilometers by 2030, with high-speed rail at about 60,000 kilometers. In 2025, the national railway operating mileage was 165,000 kilometers, including 50,400 kilometers of high-speed rail. This implies an average annual new high-speed rail commissioning of 2,000 kilometers from 2026 to 2030. At the same time, rail transit is entering a major overhaul cycle. Driven by the demand for both new construction and renovation, the company's railway equipment business is expected to maintain stable operations. In the new industries sector, during the 15th Five-Year Plan period, industries such as wind, solar, storage, hydrogen, semiconductors, power grids, and marine equipment are expected to develop rapidly, benefiting from policy support and demand. Given the company's leading position in product technology and market share, its new industries business is expected to continue its relatively fast growth. Driven by the dual engines of rail transit and new industries, China Galaxy Securities is bullish on CRRC's medium-to-long-term stable business operations.
Risk Warning
Risks include the risk of fixed asset investment growth falling short of expectations; the risk of economic growth not meeting expectations; the risk of a slower-than-expected recovery in downstream demand; the risk of intensified market competition; and the risk of tender numbers falling short of expectations.
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