China Galaxy Securities: Advanced EMU Repair Tender Ends, Railway Sector Continues to Boom

The Zhitong Finance App learned that China Galaxy Securities released a research report saying that all the models tendered for this year's Level 5 repair were the Harmony CRH series. The peak of procurement was 2014-2016, and the first or second round of Level 5 repairs will begin in 2026 according to the repair process. The bank estimates that the average annual market space for advanced repairs is expected to exceed 50 billion yuan during the 15th Five-Year Plan period, and continues to be optimistic about the continuation of the boom in railway equipment. The railway industry continues to boom, and railway investment is expected to remain high. Continued optimism about procurement of new EMUs and advanced repairs is expected to support the steady growth of railway equipment companies' performance. Under rail transport+new industry two-wheel drive, I am optimistic that CRRC (01766) will maintain steady operation in the medium to long term.

Incident: On August 6, China Railway Group issued a tender notice for the second batch of advanced EMU repair procurement projects in 2026, totaling 421.125 groups of tender standards.

The main views of China Galaxy Securities are as follows:

The high level of EMU advanced repair tenders continues to grow

Recently, China Railway announced the second batch of advanced EMU repair tenders in 2026. This tender is for 161.125 class 3 repair groups, 105 class 4 repair groups, and 155 grade 5 repair groups, superimposed the first EMU advanced repair tender in January this year (185.375 class 3 repair groups, 103 class 4 repair groups, 78 class 5 repair groups), and a total of 346.5 grade 3 repair groups, 208 class 4 repair groups, and 233 class 5 repair groups throughout the year. In terms of volume, the two EMU advanced repair tenders this year totaled 787.5 groups, an increase of 124 groups from the high level in the same period last year, second only to the peak in 2024. From a structural point of view, the two tenders in 26 years totaled 346.5 groups for Level 3, 208 for Level 4, and 233 for Level 5. The number of tenders for Level 3 repairs increased significantly (90.25 groups in '25), the third highest in history; the number of Level 4 and Level 5 repairs both declined, with 27.25 and 105 groups respectively lower than in the same period last year. In terms of models, all the models tendered for grade 5 repair this year were the Harmony CRH series. The peak of procurement was in 2014-2016. According to the repair process, they will enter the first or second round of level 5 repairs starting in 2026.

The boom in the railway industry is expected to continue

In the first half of 2026, the national railway completed fixed asset investment of 363.2 billion yuan, +2.1% year-on-year, continuing growth from last year's high; 355.2 kilometers of new lines were put into operation, +16.5% year-on-year. In the first half of the year, railways across the country delivered 2,348 billion passengers, +5% year-on-year, a record high for the same period; completed shipments of 2,622 million tons of goods, +2.5% year-on-year. As railway passenger traffic continues to be strong and freight is growing steadily, China Railway Group has maintained a high level of tenders for various types of railway vehicles this year. Since this year, China Railway has tendered 70 EMUs with a speed of 350 kilometers per hour (68 in the same period in '25), 67.375 groups with a speed of 160 kilometers per hour (42 in the same period in '25), 34,800 trucks (over the whole of 25 years), and 398 locomotives (455 in the same period in '25). According to the bank's analysis of routes, the average annual production mileage is expected to exceed 3,000 kilometers in 26-28, of which 27 will be the peak of traffic, and tenders for new EMU vehicles are expected to remain high for the next three years; at the same time, EMU maintenance is progressing according to repair, and entering the release cycle starting in 24 years. The bank estimates that the average annual advanced repair market space is expected to exceed 50 billion yuan during the 15th five years; it continues to be optimistic that the boom in railway equipment will continue.

Optimistic that CRRC's performance will continue to grow steadily

According to the China Railway Group's 15th Five-Year Plan, the country's railway operating mileage will reach about 180,000 kilometers and high-speed rail about 60,000 kilometers in 2030. In 25 years, the country's railway operating mileage was 165,000 kilometers, including 50,400 kilometers of high-speed rail, so an average of 2,000 kilometers of high-speed rail will be opened to traffic every year in 26-30 years. Meanwhile, rail transit has entered the overhaul cycle. Under the demand for new construction+renovation, the company's railway equipment business is expected to maintain stable operation. In terms of new industries, the beneficial policies and demand drivers for industries such as wind and solar hydrogen storage, semiconductors, power grids, and marine equipment are expected to develop rapidly during the 15th Five-Year Plan period. The company's product technology and market position are leading, and the new industry business is expected to continue to grow rapidly in the future. Under rail transport+new industry two-wheel drive, I am optimistic that CRRC will maintain steady operation in the medium to long term.

Risk warning: the risk that the growth rate of fixed asset investment falls short of expectations; the risk that economic growth falls short of expectations; the risk that downstream demand recovery falls short of expectations; the risk of increased market competition; the risk that tenders fall short of expectations, etc.