China Securities News-The performance of Traffic Control Technology continues to grow in 2020 and is optimistic about the solution of Smart City Rail.
Release date: Source: China Securities News

According to the 2020 annual report released by Traffic Control Technology (688015.SH), the operating income for the whole of last year was 2.026 billion yuan with an increase of 22.67% over the same period last year, and the net profit was 236 million yuan with an increase of 86.03% over the same period last year. The company said that a total of 21 urban rail transit lines were invited for public tender across the country last year (including new lines and renovated lines, excluding existing line extension lines), and the company won a total of 6 new lines, of which 2 cities were newly developed by the company.

Sealand Securities Research News pointed out that urban rail bidding had been affected by the epidemic and floods and the speed had slowed down from last year. With the fading of the impact of the epidemic, urban rail signal system bidding was on the right track and the market would accelerate growth. Traffic Control Technology is the first company in China to launch urban rail signal control system based on completely independent technology and successively launch different generations such as CBTC, I-CBTC and FAO, and is developing VBTC and intelligent urban rail technology. Therefore, it is still optimistic about the company's solid leading position and import substitution potential in the field of domestic urban rail signal system.

According to the figures of the Traffic Control Science and Technology Annual report, the company's total revenue in 2020 increased by 22.67% compared with the same period last year, and the scale of each business increased over the previous year. Wherein signal system total package business increased by 18.16%, sporadic sales business increased by 124.87%, and maintenance business increased by 78.24%. The profitability of the company's main business has been further enhanced, the level of comprehensive gross profit margin has increased significantly, the scale effect has appeared, and the overall expense rate has declined. At the same time, the company's non-recurrent profit and loss from government subsidies has also increased, which has led to a higher increase in the company's net profit.

The epidemic does not delay the increase in revenue and profits.

In 2020, the company increased the market development and application of other products and services, with remarkable results. The company continues to win new orders in business market development such as maintenance and maintenance services and sales of TIDS products. During the reporting period, the company signed a total of 322 million yuan for maintenance services; With competitive negotiations, the TIDS project amount was 110 million yuan (the contract has not yet been signed), and the newly signed contract amount for TIDS project was 94 million yuan. In terms of the composition of product revenue, the total contract business of the signal system in the company's income in 2020 is still the main source of income of the company, accounting for 91.39% of the total income, but it is slightly lower than the previous year with a decrease of about 3.48 percentage points. At the same time, the proportion of other business income of the company is increasing year by year. In the general contract business of the company's signal system, the CBTC system will gradually transition to I-CBTC and FAO systems. I-CBTC accounts for the highest proportion of revenue in the delivery project on this stage, and the proportion of FAO system revenue increases significantly.

In terms of the scale of revenue growth, the company's overall revenue in 2020 increased by 22.67% over the previous year, and all business scale increased over the previous year, of which signal system package business increased by 18.16%, sporadic sales business increased by 124.87%, and maintenance business increased by 78.24%. The growth of the general contract business of the signal system is mainly due to the increase of the bid-winning projects of the company in the previous year, and the corresponding income scale has increased as the company has entered the delivery period one after another, in which the proportion of FAO system projects in delivery projects has increased, and FAO system will be the mainstream trend of product development in the future. The company's urban rail transformation business and heavy-haul railway business account for a relatively small proportion of income, and its income fluctuation is caused by different annual delivery volume. The company's sporadic sales business and maintenance services have increased significantly compared with the previous year, and the proportion of income has increased year by year. In terms of product gross profit margin, the comprehensive gross profit margin of the company's business has increased by 5.68 percentage points compared with last year, which is mainly due to the improvement of the gross profit margin of the total contract business of the signal system. The gross profit margin in 2020 was 32.89% with an increase of 6.05% over the same period last year. It is mainly due to the following reasons: (1) With the increase of the general contracting business of the signal system, the scale effect appears, and the products tend to be standardized. The decrease in the cost of scale procurement and the cost of project implementation leads to a gradual increase in gross profit margin. (2) By increasing investment in research and development, continuously improving the technical level of products, reducing hardware costs, and increasing gross profit margin based on optimized design, the company's FAO system project delivery increased in 2020, and its high gross profit margin increased the company's comprehensive gross profit margin. (3) As the general contractor of signal system, the company has been committed to increasing the scope of application of its own products to improve the level of comprehensive gross profit, and the interlocking subsystem has gradually changed from purchasing from subcontractors to independent production by the company; (4) By constantly improving the level of project management, intensive management and giving full play to regional project synergy, project management costs are further reduced.

Industry leaders increase investment in research and development

As a leader in the industry, the company has been increasing its R & D investment. In R & D innovation: First, the company continues to increase R & D investment. In 2020, the company invested a total of 173 million yuan in R & D with an increase of 53.09% over the previous year, and R & D investment accounted for 8.55% of sales revenue, which effectively supports the company's project R & D and innovation development. Second, the company improves the R & D management system, introduces and expands the scope of gray-box testing, pre-tests algorithms and complex functions, improves product safety, transforms from waterfall model to agile development mode, and improves R & D efficiency. Chengdu R & D center has been set up to expand the R & D talent team. Third, actively carry out the development of new products and new technologies and the upgrading of existing products, ensure the progress of research and development of new products to meet market demand, promote the original CBTC series of products to coruscate new vitality, and promote the development of the stock market through the active coordination of R & D and marketing. Fourth, carry out the patent application and maintenance work smoothly. In 2020, the company applied for a total of 281 patents and authorized 149. By the end of 2020, the company had a total of 499 authorized patents. The company participated in and led 1 standard quota project of the Ministry of Transport, participated in the compilation of 8 industry standards and specifications, participated in the compilation of 2 local standards and specifications, and issued 3 industry white papers.

At present, for the current situation of non-interconnection between lines, mismatch of transport capacity, inaccurate dispatching, operation safety level to be improved, lack of intelligence in equipment maintenance, high operating costs and so on and Traffic Control Technology combines with the development of emerging technologies to develop a new generation of urban rail transit operation system.

At the same time, Traffic Control Technology is building rail transit digital twin platform, intelligent urban rail key technology and system design, verification and demonstration hardware-in-the-loop platform, and rail transit user service center platform to provide users of subway operators with integrated services throughout the whole life cycle such as product sales, delivery verification, use training, maintenance, operation guarantee and so on around the platform to build a user scenario-centric service business system and application ecology. Relying on the independent research and development of the "Tianshu" platform, the company will step up efforts to promote the "platform" technology strategy and accelerate the development of intelligent urban rail business.

In addition, the company will also rely on the national engineering laboratory, public service platform and other innovative platforms, and continue to carry out new technologies, new ideas, new methods, new system research and development and demonstration application.

Market-oriented excellent delivery capability

In terms of the market, in 2020, the company adhered to the principle of "market-oriented, customer demand-centered, rational allocation of resources", and continues to maintain the leading situation in the industry. During the reporting period, a total of 21 urban rail transit lines were invited for public bidding (including new lines and renovated lines, excluding existing line extension lines), and the company won a total of 6 new lines, of which 2 cities were newly developed by the company. The company ranks second in the market share industry in 2018, and ranks first in the industry in the overall market share in the past three years (2020-2020).





Open   tender main line (line)




The company's bid-winning line (line)




Market share calculated according to the winning   route




Note: In the above market ranking statistics, the market shares of Casco Signal Co., Ltd., a subsidiary of China Railway Signal & Communication Co., Ltd., and China Railway Signal Communication Co., Ltd., are not combined. Source: China International bidding Network (

Outside the urban rail transit market, in 2020, the company won the bid for the related project of heavy-haul railway intelligent station "Intelligent Station Construction Service of Wanshuiquan South Station of Baotou-Shenmu Railway" for the first time. The intelligent station of Baotou-Shenmu Railway will be built from three parts: intelligent shunting, intelligent operation and maintenance, and comprehensive cooperative management of the station area.

In terms of key project delivery, in 2020, Traffic Control Technology escorted the opening of 10 new and extended lines of total 232 kilometers in 9 cities, which forms a professional project management and implementation team covering the whole country and highlights the company's excellent project delivery capability. Wherein 8 lines have the function of interconnection, and the interconnection CBTC standard with independent intellectual property rights will have a broader application prospect. The high-level opening of the project has won high recognition from customers all over the world. In 2020, the company received 35 collective and individual awards from subway construction units in 13 cities. By the end of 2020, the company's products have covered rail transit lines of total 2057 km in 28 cities in China, of which 12 fully automatic FAO lines have a total mileage of 357km, and FAO performance ranks first in the industry.

The future is worth looking forward to

In recent years, urban rail transit in China has developed rapidly. According to the statistics of China Urban Rail Transit Association, as of December 31, 2020, 45 cities in mainland China have opened urban rail transit lines of 7978.19 km. New urban rail transit lines of 1241.99 km will be added in 2020; 25 cities will have new urban rail transit lines (sections) put into operation with a total of 36 new operating lines and 20 new extension or post-extension sections. It is estimated that the operating mileage of urban rail transit will exceed 1000 km in more than 15 cities, and the total operating mileage of urban rail transit in China will reach more than 36000 km by 2035.

According to the "1-8-1-1" development layout of intelligent urban rail put forward in the outline, we will "draw a blueprint for the construction of intelligent urban rail, create eight major intelligent systems, establish an urban rail cloud and big data platform, and formulate a set of intelligent urban rail technical standard system in the future." At the same time, according to the "two-step" strategy, China's urban rail industry will achieve a world-leading intelligent level by 2035, and build a global leading intelligent urban rail technology system and industrial chain. The "1-8-1-1" layout and two-step strategy formulated in the outline reflect that the construction of intelligent city rail in our country is moving from "overall planning" to "landing in an all-round way". At present, our country is in the "primary stage" of intelligent urban rail construction.

Gao Chunhai, chairman of Traffic Control Technology, said that rail transit will maintain a golden period of rapid development in the next 10 to 15 years, which will become the best and rare opportunity for the company to carry out technology iteration and innovative application. Traffic Control Technology will firmly seize the golden opportunity and combine new technologies such as 5G+AICDE and urban rail to promote China's urban rail technology to lead the global development in the era of intelligent urban rail.

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