Impact of Railway Passenger Volume Growth on Valuation of Listed Railway Companies

• Significant rebound in holiday and phased passenger flow: During the 2025 Mid-Autumn and National Day holidays, China’s railways transported a total of 213 million passengers over 12 days, with an average daily year-on-year growth of 8.6%, and multiple transportation indicators hit record highs [1]. This indicates that the recovery and growth of railway passenger flow during holidays/peak seasons are sustainable.
• Continued high prosperity in New Year’s Day (early 2026): The Yangtze River Delta Railway transported 3.7 million passengers during the New Year’s Day period, setting a new record for New Year’s passenger volume (Source: China Railway Shanghai Bureau Group). Combined with the 2025 holiday passenger flow performance, it can be reasonably judged that the passenger transport prosperity was still in an upward range in early 2026 (analysis and deduction).
• Overall base increase in the first half of the year: China’s railway passenger volume reached 2.24 billion passengers in the first half of 2025, a record high for the same period in history; combined with a more flexible market-oriented fare mechanism, it helps boost revenue during periods of strong demand [1].

1. Direct amplification of revenue and profit

• An increase in passenger turnover directly drives fares and ticketing revenue, and combined with market-oriented measures such as “multi-tier fare floating”, it helps expand profit elasticity during peak seasons [1].
• Target company verification: Beijing-Shanghai High-speed Railway’s quarterly revenue in Q1-Q3 2025 was approximately 975 million yuan, 1.079 billion yuan, and 1.179 billion yuan respectively, showing continuous growth (Broker API company overview data).

2. Fixed cost amortization and profit resilience

• High-speed railways/railways are industries with high fixed costs and low marginal costs, with obvious scale effects; an increase in passenger flow helps amortize fixed costs such as depreciation and labor, improving profit margins and ROE.
• Target company verification: Beijing-Shanghai High-speed Railway has a net profit margin of about 30.6% and an operating profit margin of about 41.9% (Broker API company overview data), showing the realization of scale advantages under existing assets.

3. Valuation repair space

• Linkage between valuation indicators and profit improvement: Taking Beijing-Shanghai High-speed Railway as an example, P/E is about 19.3x and ROE is about 6.4% (Broker API). If profits and turnover continue to rise, improved ROE is expected to push P/B to repair to a more reasonable range, driving the valuation center upward.
• Strengthening of network effects: Passenger flow growth strengthens the network value of trunk and regional railway networks, supporting long-term profit stability and capital return rates.

Note: Financial indicators are all from Broker API company overview; impact judgments are logical deductions based on business attributes and valuation/profit characteristics.

• Linkage with aviation sector: Web search results show that the aviation and airport sector rose significantly in December 2025 (+6.68%), and civil aviation passenger volume in October 2025 saw domestic route turnover increase by 5.7% year-on-year, while international and regional routes recovered to 113.1% of 2019 levels [2]. This reflects the overall prosperity recovery of the travel chain. If travel demand continues to repair, railway passenger transport and aviation may fluctuate in the same direction in terms of valuation sentiment, but railways are relatively stable with more robust cash flow, and risk-return attributes are different.
• Risk points:
  1. Changes in macro/income expectations: If macroeconomic or household income weakens, travel willingness and fare affordability may be under pressure, affecting turnover and fare elasticity.
  2. Cost and supply: Rising costs such as energy consumption, labor, and maintenance, or faster-than-expected release of transport capacity supply, may erode profits.
  3. Policy and capital expenditure: Changes in investment and network planning rhythm, fare supervision and subsidy mechanisms will affect profit and valuation paths.
  4. Industry comparison risk: If the aviation and other travel chains have faster supply contraction and stronger demand repair, they may outperform the railway sector阶段性 (analysis and deduction).

• Passenger volume and load factor: Track daily/periodic passenger volume and load factor during holidays and peak periods.
• Fare and structure: Observe the implementation intensity of floating fares and the impact of fare structure changes on ARPU.
• Cost and efficiency: Pay attention to cost control of depreciation, energy, labor, and operation and maintenance, as well as the effect of fixed cost amortization.
• Asset turnover and ROE: Attach importance to the repair path of asset turnover and ROE (especially for passenger transport trunk lines with high fixed costs).
• Network and policy: Track the impact of network expansion/optimization, fare/subsidy policies on long-term profit stability.

• The impact of railway passenger volume growth on the valuation of listed railway companies shows “structural and path-based” characteristics:
  • Direct positive impact: Listed companies dominated by passenger transport and with prominent scale effects (such as trunk line passenger transport entities like Beijing-Shanghai High-speed Railway) benefit the most directly and quickly (analysis and deduction).
  • Indirect/Neutral: Companies dominated by freight transport (such as Datong-Qinhuangdao Railway), equipment manufacturing enterprises (such as CRRC), and engineering and construction central enterprises (such as China Railway Construction) are more driven by capital expenditure and new line planning, and passenger volume fluctuations have relatively limited or longer-term impacts (analysis and deduction).
• Core transmission: Passenger turnover increase → Fare and ticketing revenue amplification → Fixed cost amortization → Profit margin and ROE improvement → Valuation center repair.
• Current evidence: China’s railway passenger volume hit a high in holidays and the first half of 2025, the Yangtze River Delta set a record in New Year’s Day 2026, and Beijing-Shanghai High-speed Railway’s quarterly revenue growth and high net profit margin/operating profit margin all point to the substantial pull of passenger transport prosperity on the profits of passenger transport companies (combination of data and deduction).
• Layout idea: Against the background of travel chain repair and peak verification, prefer targets with high passenger transport proportion, excellent network effects and cost control; at the same time, pay attention to the overall linkage of the travel chain and the disturbance of cost and policy risks on valuation rhythm.

[1] Jinling API Data
[2] Sina Finance - High-speed Railway Leads (Discussion on High-quality Railway Development and Profit): https://cj.sina.cn/articles/view/1663612603/6328b6bb02001wdgu
[3] Guoxin Securities - Transportation Industry Weekly Report (Sector Index and Valuation Position): https://www.fxbaogao.com/detail/5204266
[4] East Money PDF - Off-season load factor remains high, supply-demand reversal is expected to drive fare recovery (Civil aviation load factor/fare and supply-demand analysis): https://pdf.dfcfw.com/pdf/H301_AP202512171802364334_1.pdf
[5] China Railway Shanghai Bureau Group Co., Ltd. (Information on record-high passenger flow of Yangtze River Delta Railway in New Year’s Day 2026), public media reports (Source: China Railway Shanghai Bureau Group).