The First Annual Report After The Listing Is Outstanding. How Can Beijing-Shanghai High-Speed Railway Fight Epidemic This Year?

In April 16th, the first high-speed rail company handed over its first report card after the listing. Beijing-Shanghai high-speed railway's earnings report is quite bright: in 2019, the total revenue of Beijing-Shanghai high-speed railway was 32 billion 942 million yuan, an increase of 5.72% over the same period last year, and the net profit attributable to shareholders of listed companies was 11 billion 937 million yuan, an increase of 16.48% over the previous year, setting a new high.

Under the impact of the epidemic, the volume of railway passenger traffic has declined overall. The performance of Beijing-Shanghai high-speed railway in 2020 is also hard to say, but two agencies still maintain their "overweight" rating. Huang Ying, an analyst at Tianfeng securities, believes that the decline in passenger traffic volume should be less than that in the whole country. Qu Yongzhong, a Northeast Securities analyst, believes that the liberalization of high-speed rail fares has been liberalized, and that the elasticity of fare increases can be expected.

The most profitable Railway

According to the financial report, in 2019, the Beijing-Shanghai high-speed railway carried 53 million 330 thousand passengers in the whole year, a decrease of 650 thousand from 53 million 980 thousand last year, a decrease of 1.21%, and 215 million passenger trips across the country, an increase of 10.1% over the same period last year, accounting for 6% of the total number of passenger trips across the country.

In 2019, the revenue of Beijing-Shanghai high-speed railway reached 32 billion 942 million yuan, an increase of 5.72% over the same period last year. Net profit attributable to shareholders of listed companies was 11 billion 937 million yuan, an increase of 16.48% over the same period last year. The realization of basic earnings per share was 0.29 yuan, an increase of 11.54% over the same period last year.

A series of data shows that Beijing-Shanghai high-speed railway is the most profitable railway in our country. Huang Ying believes that cost control is appropriate and gross margin is the key to growth in 2019. Despite the impact of changes in the number of trains and trips, the passenger traffic revenue of Beijing-Shanghai high-speed railway decreased by 0.9% to 15 billion 645 million yuan in 2019, but the income from road network services increased significantly from 12.7% to 17 billion 18 million yuan.

The financial report also revealed some important data. For example, in 2019, the passenger volume of Beijing Shanghai high-speed railway completed 95 billion 610 million person kilometers, an increase of 7.9% over the same period, accounting for 6.58% of the total turnover of the national railway passenger transport. The 187 thousand and 300 train lines on the whole line increased by 14 thousand and 800 in the 172 thousand and 500 column compared with the previous year, an increase of 8.58%. Of them, the Beijing-Shanghai high-speed railway served 36 thousand trains, a decrease of 3 thousand and 200 in the 39 thousand and 300 column compared with the previous year, and 8.14% reduction. Other transport enterprises took 151 thousand and 300 trains across the line, 133 thousand and 200 more than the previous year, with an increase of 18 thousand and 100.

Huang Ying pointed out that the growth of passenger volume and turnover volume of Beijing Shanghai line is higher than that of the whole country. At the same time, the proportion of trains in this line dropped to 19.2% from 22.8% in 2018. Correspondingly, the proportion of cross line vehicles increased from 77.2% to 80.8%, and the trend over the past few years continued. Huang Ying thought that with the high speed rail network's encryption, the limited capacity of Beijing Shanghai line was further tilted to cross line cars.

Qu Yongzhong pointed out that according to the prospectus information, the gross profit margin of the company's Cross trains in the first three quarters of 2019 was 62.1%, which was higher than the gross margin of 41.6% of the train line. The increase in cross line trains and the drop in major cost items helped the Beijing-Shanghai high-speed railway raise gross margin to 50.7% and raise net interest rates to 36.24%.

Challenges in 2020

Beijing-Shanghai high-speed railway also hints at the risk of the epidemic in its earnings report. It is expected that the new crown epidemic situation and prevention and control measures will have a temporary impact on its production and operation in 2020, depending on the progress and duration of the epidemic prevention and control as well as the implementation of the prevention and control policies.

As we all know, the first wave of the impact of the epidemic is the traffic and tourism industry. On April 15th, the CAAC announced at a monthly regular conference that the civil aviation industry accumulated a deficit of 39 billion 820 million yuan in the first quarter of this year, of which the airline suffered a loss of 33 billion 620 million yuan. The railway situation is also not optimistic. In April 16th, the National Railway Group disclosed that in the first quarter of this year, the total number of passengers sent by the state railway totaled 377 million 100 thousand passengers, and the total volume of freight delivery totaled 823 million 960 thousand tons, up 3.1% from the same period last year. It is worth noting that in the first quarter of 2020, the total number of passengers sent by the state railway totaled 377 million passengers, a 54.8% decrease from 835 million in the same period last year.

According to the simple calculation of the total passenger volume sent by the Beijing-Shanghai high-speed railway, which accounted for 6% of the total volume of passenger traffic in the country, the number of Beijing-Shanghai high-speed railway passengers in the first quarter of 2020 was only 22 million 620 thousand passengers. According to the Beijing-Shanghai high-speed railway's earnings data, the first quarter of 2019 revenue was 7 billion 559 million yuan, net profit of 2 billion 560 million yuan, then the first quarter revenue and net profit in 2020 will be less than 3 billion 500 million yuan and 1 billion 200 million yuan.

Affected by the epidemic, the transport industry is generally seen to be on the decline. Beijing-Shanghai high-speed railway has been recommended by the agency to increase its holdings. Huang Ying believes that although the volume of passenger traffic in the whole country will be reduced due to the epidemic, the business passenger flow on Beijing Shanghai line is low relative to tourism demand. Therefore, it is believed that with the resumption of work, the decline of passenger traffic volume should be less than that of the whole country. Although the revenue is decreasing and the cost is decreasing, she pointed out that the current high-speed rail train stop will bring savings to the cost of entrusted transportation, EMU use fees and passenger service fees.

However, when many enterprises at home and abroad deal with the economic crisis or the difficult period of business operation, they often choose to reduce wages and reduce costs. For example, many airlines abroad have taken the way of reducing the salaries of senior executives and middle-level cadres, and Hainan Airlines has taken similar measures. And domestic appliance companies, such as Haier, Midea and GREE, also voluntarily give up performance pay or executives cut salaries by 30%.

Reporters noted that the Beijing-Shanghai high-speed railway paid 38 million 364 thousand and 800 yuan in 2019, according to the total number of 37 employees, it seems that the per capita salary of employees is more than 1 million yuan. However, this data is questionable, because in accordance with the information disclosed before the listing of Beijing-Shanghai high-speed railway, there were 67 employees in the first three quarters of 2019, and in the fourth quarter, the employment requirements were standardized, and the seconded personnel were cleaned up, leaving only 37 employees left. However, even if the salary is calculated on the basis of 67 people, the average annual income per person is more than 570 thousand yuan, which is quite impressive compared with other railway companies.

In the case of bad weather, will the Beijing-Shanghai high-speed railway take the lead in the direct link between profits and executive pay?

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