自有线路和跨线业务增长依然乏力；下调评级至持有

2024A2025E2026E42,157.142,919.444,184.145,980.812,768.313,249.314,375.315,981.80.260.270.290.260.280.30 2027E0.330.32 Kelly Zou * | Equity Analyst852 3767 1116 | kelly.zou@jefferies.comJohnson Wan * | Equity Analyst852 3743 8083 | johnson.wan@jefferies.com The Long View: BSHRInvestment Thesis / Where We Differ•The FY24 and 1Q25 results disappointed the market due to stalledpax traffic growth on the Beijing-Shanghai HSR, affected by airlinecompetition and macroeconomic weakness. The cross-line train servicesaw faster journey km growth in 2024, but this also slowed in 1Q25 dueto weak demand. We turn cautious on BSHR’s business growth outlookfor 2025. Downgrade to HOLD. Potential share price catalysts are JingfuAnhui Company's traffic and profit growth taking off.Base Case,CNY6, -0%•Our base case PT of RMB6 is based on atarget 2025E P/E multiple of 22x.Sustainability MattersTop Material Issue(s):Transportation safety/quality: As a leading railway operator, BSHR plays acentral role in high-speed railway transportation, while increasing traffic and COVID has imposedpressure on safety transportationCompany Target(s):•Product innovation: Introduction of season pass, floating price, and frequent traveler plan toimprove service quality and profitability•Target to increase railways competitiveness in long-distance travel compared to flyingQs to Mgmt:•How are you positioning the company for potential changes in a regulatory landscape that factorsin ESG?•How do you ensure transportation safety in an increasingly-connected environment?Please see important disclosure information on pages 5 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,CNY7, +16%•Traffic and train journey km of cross-lineservices of self-own edlines and Jingfu AnhuiCompany exceeds maket expectations.•Multiple Units (MU) upgrading to increase thetrain frequency.•Jingfu Anhui Co turns profitable earlier thanexpected.•Our bull-case PT of RMB7 is based on a target2025E P/E multiple of 25x. Downside Scenario,CNY5, -17%•Loadfactorimprovementexpectations.•Losses widen at Jingfu Anhui Co.•New lines divert passenger traffic.•Our bear-case PT of Rmb5 is based on a target2025E P/E multiple of 19x.Catalysts•Rail traffic recovery and growth accelerates.•GPMexpansionexpectations.•Jingfu Anhui Company turns profitable earlierthan the market expects.•Jingfu Anhui Company's traffic growth takesoff. missesexceedsmarket2 Figure 1 - BSHR - FY24 & 1Q25 results overview.Rmb mnRevenueCOGS-16,771Gross profitGPMSales taxSelling expenses% of salesAdministrative expenses% of salesR&D% of salesOther gains and lossesEBITEBIT marginNet financing costJV and associate profit contributionPBTTax% tax ratePATMinority interestProfit to common shareholderEPS(Rmb/share)Source: Company data, JefferiesFigure 2 - Company snapshot- BSHR.BSHR (601816 SH)TickerRatingTarget price - RMB/shShare price (16 May, 2025) - RMB/shUpside/DownsideNumber of shares (mn)Market cap (US$ mn)Liquidity (3M avg, US$ mn)Income Statement (RMB mn)RevenueGross ProfitGPMEBITDAEBITEBIT marginNet interest expenseAssociates and JVPre-tax ProfitNet ProfitCore Net Profit (ex-Associate)Core NPMBalance Sheet (RMB mn)Cash and liquid assetsTrade ReceivablesTotal AssetsTrade PayablesInterest bearing debtShareholders EquityNet cash (debt)Cash Flow (RMB mn)Cash flow from operationsNet capexFCFComparison to consensusEPSConsensus EPS% diff to Bloomberg consDPSSource: Company data, Jefferies estimatesPlease see important disclosure information on pages 5 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Figure 3 - Revenue progression of Jingfu Anhui Company (Rmb mn).1,9143,53201,0002,0003,0004,0005,0006,0007,00020192020Source: Company data, JefferiesPlease see important disclosure information on pages 5 - 10 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Company DescriptionBSHRBeijing-Shanghai High-Speed Railway (BSHR) is the busiest and most profitable high-speed railway in China with total route length of 1,318km.Company Valuation/RisksBSHROur PT is based on a 2025E P/E of 22x. Key downside risks include traffic or cross-line dispatched train journey km growth below expectationsand/or Jingfu Anhui Company's traffic growth coming in below expectations or the company remaining loss-making. Key upside risks includefaster traffic or cross-line dispatched train journey km growth than market expectations and/or Jingfu Anhui Company's traffic growth or profitexceeding expectations.Analyst Certification:I, Kelly Zou, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or viewsexpressed in this res