Shen Wan Hongyuan: Passenger traffic reached a new high in July and the second batch of EMU advanced repair tenders started in '26

The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that railway passenger traffic volume and railway fixed asset investment all reached record highs, and the second batch of advanced EMU repair tenders was launched in 2026. Huge vehicle ownership guarantees future market growth. Take EMUs as an example. According to EMU design life estimates, starting in 2027, the Harmony EMU will soon enter the replacement cycle, and a large number of trains will need to be overhauled or replaced. The bank is optimistic about railway vehicle OEMs and their core suppliers.

Shen Wan Hongyuan's main views are as follows:

Incidents

According to China Railway Group's disclosure, the total amount of fixed asset investment for railways in January-July was 440.6 billion yuan, an increase of 1.8% over the previous year; in January-July, China's railways sent 2.8 billion passengers, an increase of 4.1% over the previous year.

According to China Railway procurement platform information, the second batch of EMU advanced repair tenders will be launched in 2026. Among them, 138 trains (161.125 groups), 89 trains (105 groups), and 143 trains (155 groups) will be purchased for Level 3, Level 4, and Level 5 repairs, respectively.

Railway passenger traffic and railway fixed asset investment all reached record highs

In terms of passenger traffic: From January to July, railways across the country delivered a total of 2.8 billion passengers, an increase of 4.1% over the previous year; railways across the country arranged to operate an average of 11,462 passenger trains per day, an increase of 571 trains, an increase of 5.2% over the previous year. In terms of fixed asset investment: From January to July, the total amount of fixed asset investment in railways nationwide was 440.6 billion yuan, an increase of 1.8% over the previous year.

The second batch of EMU advanced repair tenders was launched in '26

The tender procured 138 columns (161.125 groups), 89 columns (105 groups), and 143 columns (155 groups), respectively. In addition to the semi-annual tender, 297 columns (346.5 groups), 168 columns (208 groups), and 216 columns (233 groups) were purchased for Level 3, Level 4, and Level 5 repairs, respectively, for a total of 681 columns (787.5 groups).

The scale of railway vehicle ownership has expanded, and demand for maintenance and replacement in the aftermarket has increased

According to the 2025 “Railway Statistics Bulletin”, the number of railway locomotives in the country is 22,700, including 0.79 million internal combustion locomotives and 14,700 electric locomotives. The number of railway buses in the country is 83,000, including 5230 standard EMUs and 41,836. The number of railway wagons in the country is 1,024 million. Huge vehicle ownership guarantees future market growth. Take EMUs as an example. According to EMU design life estimates, starting in 2027, the Harmony EMU will soon enter the replacement cycle, and a large number of trains will need to be overhauled or replaced.

Optimistic about railway vehicle OEMs and their core suppliers

Focus on: CRRC (vehicle and core components), Times Electric (traction system), Mind train control (train control and monitoring system), China Express (train control and communication signal system), Times New Materials (vibration damping and noise reduction components), Coney Electromechanical (car doors), Jinchuang Group (interior), Boshen Co., Ltd. (wheel set), Jinxi axles (axles, carriages), China Railway Construction Heavy Industries (shield machines), China Railway Industry (shield machines), etc.

Risk warning: macroeconomic and policy uncertainty; risk of railway investment falling short of expectations, etc.