Investment in railway information technology accelerates, AI boosts intelligent progress

Abstract

Macroeconomic Level - The large-scale equipment update cycle for railway transit is approaching, and overall fixed asset investment is迎来 a turning point, with the industry's prosperity expected to accelerate year by year:

• Total railway investment welcomes a "bottoming rebound" turning point, the ten-year renewal cycle will reopen. From 2014 to 2023, the total railway investment was completed at 808.8 / 823.8 / 801.5 / 801.0 / 802.8 / 802.9 / 781.9 / 748.9 / 710.9 / 765.4 billion yuan respectively. It can be seen that since 2020, railway investment has been declining year by year, but in 2023, a rebound occurred with an annual total of 764.5 billion yuan, a year-on-year increase of 7.5%; from January to April 2024, national railway fixed asset investment reached 184.9 billion yuan, a year-on-year increase of 10.5%.

• The procurement quantity of the Fuxing high-speed train exceeded expectations, demonstrating the enthusiasm of China Railway's investments. The "350 km/h Fuxing intelligent configuration train procurement project" is one of the important tasks that the China Railway Group executes every year. The first bidding announcement for 2024 shows that the procurement quantity has reached 165 sets (summary of different formations), surpassing the procurement amounts of previous years in 2023 (which were 103/55/6 sets respectively).

• Affected by factors such as equipment lifespan, ten years is a major cycle for railway investment, and after ten years, a large-scale equipment upgrade will be reopened. Therefore, the total investment in railway fixed assets will show a year-on-year upward trend at the beginning of the cycle, with a significantly large absolute value, and will gradually decline year by year towards the end of the cycle. The turning point in 2023 and the trend of year-on-year growth in investment in the first four months of 2024, as well as the procurement volume of the first phase of EMUs in 2024 exceeding last year's historical figures, all strongly confirm that the trend of a new cycle of railway investment has gradually emerged, and China National Railway is showing strong enthusiasm for investment. We expect that in the next three years, there will be a golden period for the replacement of various products and the introduction of new products, and the total amount of investment in railway fixed assets will gradually increase.

In the context of the macro perspective - the wave of large-scale equipment updates, the acceleration of railway information technology investment:

• Policy Support: In September 2023, the National Railway Group Co., Ltd. issued the "Digital Railway Plan". According to the "Plan", by 2027, the level of railway digitalization will be significantly improved, with key areas achieving intelligence. By 2035, the digital transformation of railways will be fully completed, and the degree of intelligence in various business areas of railways will be comprehensively enhanced; according to the "14th Five-Year" Railway Technology Innovation Plan released by the National Railway Administration, the construction of the smart railway technology system architecture version 2.0 will be established. By 2025, smart railway technology will achieve comprehensive breakthroughs, including technological innovations in smart construction, smart equipment, and smart operations.

• Industry Response: At the State Council press conference in February 2024, the National Railway Administration stated that it will formulate emission standards and management measures for diesel locomotives, improve and update subsidy policies, and strive to basically eliminate old diesel locomotives by 2027. This is also a concrete action taken by the railway industry to implement the Party Central Committee's directive on promoting large-scale equipment updates.

• We believe that in the wave of railway upgrades and replacements, investment in information technology is an important trend, and the investment value will concentrate on niche areas closely related to technological innovation and application expansion, such as intelligent equipment and operation maintenance, technological innovation, and the integration of technologies like 5G + big data + artificial intelligence.

Microscopic Level - AI Fuels Progress in Railway Intelligence. AI technology can accelerate the comprehensive intelligent upgrade of railway systems, such as using AI technology for safety monitoring (AI video analysis actively reporting anomalies), intelligent detection and maintenance (early fault identification and predictive maintenance), intelligent scheduling (optimizing train operation plans), passenger service optimization (analyzing passenger behavior and preferences), intelligent inspection, operational efficiency analysis, intelligent customer service, and more. In practical applications, a company launched the railway visual capability platform "Anshi Platform," which separates business systems from visual services through platform-based intelligent vision. By standardizing algorithms and models, dynamic management of intelligent visual capabilities is achieved. It also launched the country's first large model technology product for the railway industry, the "Railway AI Knowledge Intelligent Assistant," which has been trialed in some railway bureaus, local railways, and urban railways.

Recommended to pay attention to: railway command and dispatch systems/specialized communications, high-speed maglev operation control systems/signaling systems, train operation control systems/automatic ticketing and checking systems, train operation control systems and related enterprises in these fields.

Hash Rate

Optical Communication: Zhongji Xuchuang, Xinyi Sheng, Tianfu Communication, Taichengguang, Tengjing Technology, Guangku Technology, Guangxun Technology, Dekeli, Liant Technology, Huagong Technology, Yuanjie Technology, Cambridge Technology, Mingpu Optoelectronics.

Power Optimization/Scheduling/Renting: Hengwei Technology, Siter Technology, Zhongke Shuguang, three major telecom operators.

Mining Equipment: ZTE Corporation, Unisoc, Ruijie Networks, Shengke Communication, Fling Technology, Industrial Fulian, Huadian Technology, Cambricon.

Liquid Cooling: Invoic, Shenling Environment, High Wave Co., Ltd., Jialitu.

Edge Computing Power Carrier Platform: Meige Intelligent, Guanghetong, Yiyuan Communication.

Satellite Communication: China Satellite Communications, China Satellite, Zhenyou Technology, Huali Chuangtong, Electronics Science Chip, Haige Communication.

Data Elements

Operators: Three major operators.

Data Visualization: Haohan Depth, Hengwei Technology, China New SiKe.

BOSS System: AsiaInfo Technology, Tianyuan Dike, Dongfang Guoxin.

Risk Warning: AI development is not meeting expectations, computing power demand is not meeting expectations, market competition risks.