CRRC and Zhuzhou CRRC: Revisit the defensive compounders: improving fundamentals, value support, and pricing rebound; 2Q26 preview

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CRRC and Zhuzhou CRRC: Revisit the defensive compounders: improving fundamentals, value support, and pricing rebound; 2Q26 preview

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demand issue, and the value angle is becoming increasingly difficult to ignore. mufan.shi@jpmorgan.com

• CRRC’s value and order momentum are setting up for a compelling re- Beatrice Lam

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rating as the market rotates back to cash-flow durability. CRRC trades at beatrice.lam@jpmorgan.com

0.7x/0.9x P/B, with net cash at c.1/3 of market cap and a persistent gap between J.P. Morgan Securities (Asia Pacific) Limited/

FCF and reported profit. The company’s c.5% yield and the recently announced J.P. Morgan Broking (Hong Kong) Limited

buyback (25–51MM shares) reinforce controlling shareholder alignment. The

latest quarter (Apr–Jun 2026) saw Rmb51.6B in new orders, a rebound from

Rmb36.3B in the prior quarter, led by MU sales, freight wagons, and

overhaul/maintenance. The mix is incrementally constructive, and the

diversified customer base supports a stable pipeline. We see scope for better

share price performance as the market re-focuses on cash-flow durability and

policy-linked demand visibility, especially as train procurement shows signs of

re-acceleration after a muted year.

• ZZCRRC’s IGBT story is shifting toward pricing normalization, with

AIDC and Infineon read-throughs supporting the margin recovery

narrative. ZZCRRC’s power semi pricing is recovering, with Infineon’s recent

price hikes and AIDC-driven demand tightening global DD-SS and providing a

positive backdrop for the sector. Management reports full utilization for IGBT

and progress on SiC ramp at the Zhuzhou plant. The key swing factor is realized

pricing: the company issued a July price increase letter (headline 15%), but