Strategic Analysis of the Chinese Rolling Stock Servicing and Maintenace Market

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Strategic Analysis of the Chinese Rolling Stock Servicing and Maintenace Market

  1. 1. Strategic Analysis of the Chinese Rolling Stock Servicing and Maintenance Market To support XXX Turbo Services in developing a robust growth strategy for China Final ReportPresented to:-XXX 31st January 2011-XXX
  2. 2. Table of Contents Chapter Content 1. Executive Summary 2. Research Background & Scope 3. Overview of the Chinese Rail Market 3.1. Overview and Macro Economics of the Chinese Rail market 3.2. Overview of Rail Infrastructure in China 3.3. Rail Rolling Stock Market in China 4. Review of the Traction Motor Market in China 4.1. Overview of the Traction Motor Market in China 4.2. Traction Motor Delivery Forecasts 5. Analysis of the Traction Motor Maintenance Market 5.1. Drivers , Restraint and Challenges 5.2. Traction Motor Maintenance Definition 5.3. Traction Motor Maintenance Market Dynamics 6. Conclusions & Recommendations 7. Appendix 2
  3. 3. High Speed Rail to have highest deliveries for traction motors by 2020.Metro and Light Rail to have strong demand for new rolling stock until 2030. Rolling Estimated Estimated Total size of stock Traction TractionRolling Stock Geographic size of Application Installed fleet growth motor market motor Segment Scope Installed fleet in 2010 rate size in 2010 market size in 2020 (CAGR) in 2020 Mainline Principle Intercity, Overall- railway used Inter- 2.7% for freight and Province 18,731 24,381 (Diesel-Electric 112,386 146,286 passenger and 1.2% Electric 5%) transport Nationwide Metro and Urban Light Rail passenger Cities and transportation urban 11,864 18,931 systems that 4.8% 28,136 44,896 agglomerati railcars railcars serve cities ons and extended urban areas High Speed Rail Rail transportation that is Intercity 4,920 21,573 capable of and 15.9% 11,772 51,616 railcars railcars speeds in Nationwide excess of 200km/hr 3
  4. 4. Key economic targets of the 12th Chinese five year plan includes astrong RMB 2.8 Trillion allocation for rail sector. Key Targets of Chinese 12th Five Year Plan (China), 2010 16 14.2 14 12.7 Forecasted % growth in GDP Growth in GDP (%) Key Economic Targets: 12 10.3 • Annual GDP growth : 7%. 9.6 9.2 9 10 8.7 8.5 8 8 • Increase Urbanization from 47.5% to 51.5%. 8 • Increase service sector contribution to GDP to 6 7.5 7.5 7.5 7.5 7.5 47%. 7 7 7 7 7 4 • Increase spending on R&D to 2.2% of GDP. 2 • Hold Inflation at or below 4% per year. 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GDP Growth % GDP Target 11th 5 year plan Key Non-Economic Targets: GDP target 12th five year plan • Increase non-fossil fuel use to 11.4%. Source: Chinese Bureau of Statistics, KPMG • Reduction of energy use per unit of GDP: 16%. Economic Indicator USD Bn • Reduction of CO2 emissions per unit of GDP: GDP (2010) 5,926 17%. Bank capital to assets Ratio 5.6 • Increase forest coverage by 21.7%. Total Reserves (including gold) 2,913 • Decrease pollutants COD and Sulphur Dioxide by Total External Debt Stocks 548 8% each. • Population to be controlled below 1.39 Billion. Present Value of External Debt 522 • 36 million new affordable homes for people in low 185 Foreign direct investment, net inflow income. Private Capital Flows 148 IBRD loans and IDA credits (DOD, current US$) 21 Source: CEIC and J.P. Morgan estimates Source: Frost & Sullivan Analysis 4
  5. 5. The Chinese rail market for both freight and passenger segment hasa strong correlation with growth in Chinese economy (Annual GDP). The relationship between GDP growth and rail traffic (China), 1990-201025.0%20.0%15.0%10.0% 5.0% 0.0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 -5.0%-10.0%-15.0% Annual Change in Rail Freight Volume in % Annual Change in Rail Passenger Ridership in % Annual Change in GDP in % Source: Frost & Sullivan Analysis 5
  6. 6. Overview of Rolling Stock in China: As China increases efforts on electrification, electric locomotives will have 43% presence by 2020. 1,954 deliveries of High Speed Rail train- sets and 1,158 Metro train-sets to meet ambitious Chinese Rail program. Overview of Forecast for Rolling Stock (China), 2010-2020 • Population of Electric Locomotives has been increasing steadily since 2001 with a CAGR of 6.7%. Expected CAGR till 2020: 4.9%. • The demand for high speed rail is expected to reduce post 2020 as all projects come to a close. • There is massive potential for Metro and Light rail rolling stock as China shifts focus on developing urban rail networks for its cities. Total Locomotives: Total Number of Cities with : 24,381 Number of High speed lines expected to Total Cars of Multiple Units: • Operational Metro lines: 14 be inaugurated in 2012: 40,504 • Metro lines under construction: 27 • PDL lines : 14 • Metro lines Planned: 23 • InterCity lines : 6 Total Locomotives: • Metro systems pending approval: 14 18,731 Metro & Total Cars of Multiple Units: 21,573 Light Rail 16,784 18,931 18,931 Metro &Light Rail 13,837 High Speed 11,864 12,245 21,573 11,864 Rail 10,543 High Speed 4,920 6,486 Rail 4,920 24,381 Mainline 18,731Mainline Mainline Electric Mainline Diesel High Speed Rolling Metro & Light Rail Stock 2010 2010 2020 2020 Source: Chinese MOR, Frost & Sullivan Analysis 6
  7. 7. Market Share of leading Market Participants across the Chinese RollingStock Market Classifications. OEM Market share of Mainline Locomotives Produced from 1970 to 2010 (China), 2010 CNR Dalian,Bombardier, 500, 2% GE, USA, 500, 2% Others, 1483, 6% CNR Datong, 565, 2% OEM Market share of High Speed Rail CNR Dalian, CSR Ziyang, CNR Alstom, CNR Datong, 590, 3% Datong, CSR Sifang, 4017, 17% CSR Qishuyan, 605, 3% Rolling Stock Ordered till 2009 (China), 2009 CNR Dalian, CSR Ziyang,CNR Datong, CSR Sifang, 845, 4% CNR Dalian, 2791, 12% CSR Zhuzhou, CSR Ziyang, 990, 4% Toshiba,CNR Dalian,CNR Datong, 1040, 5% CSR Zhuzhou,CSR Ziyang,CNR Datong, 1743, 8% Siemens,CNR Tangshan, 480, CSR CSR Qishuyan, 1722, 7% 13% CNR Beijing Feb. 7th, CSR Zhuzhou, 1640, 7% 1461, 6% Bombardier CSR Sifang, 1280, CNR Tangshan,Qingdao, 1141, 35% Kawasaki, CSR Sifang, 480, 13% 5% CSR Zhuzhou,CSR Ziyang,CNR Datong,CNR Dalian, 1347, 6% OEM Market Share of Metro and Light Rail CSR Sifang, 720, 19% Rolling Stock (China), 2010 CSR Sifang, Kawasaki, 120, 1% Alstom, Shanghai Alstom, 152, 1% CSR Puzhen, 112, 1% Hyundai Rotem,Mitsubishi, 136, 1% Alstom,CNR Changchun, 720, Adtranz CAF, 184, Unclassified, 228, 2% 20% Shanghai Electric, 6, 0% 2% CNR Changchun , 302, 3% CNR Changchun, Shanghai Alstom, 314, 3% Siemens, 326, 3% CNR Changchun, 2566, 21% Kinki Sharyo, Kawasaki, 356, 3% Shanghai Electric Alstom, 414, 3% CNR Dalian, 504, 4% CSR Zhouzhou, 1476, 12% CNR Changchun, Bombardier, 918, 8% CSR Puzhen/Alstom, 1136, 9% CSR Zhouzhou, Siemens, CSR Sifang, 1030, 9% 592, 5% Metro Cammel, 1124, 9% Source: Frost & Sullivan Analysis 7
  8. 8. Overall Traction Motor Overhaul Revenue Forecast. Revenue forecast for overhauling of traction motors (China), 2010- 2020 $90 Millions $71 $72 $70 Revenue Forecast from Traction Motor Overhaul $80 $69 $66 $67 $64 $70 $61 $59 $57 Number of Motors in Installed Base, 2010 $56 $60 High Metro Speed and Light Rail Rail $50 • Mainline locomotives are the largest providers for 18% 8% traction motor overhauls as the fleet is aged and voluminous $40 • Metro and Light rail segment is an excellent Mainline Mainline opportunity for service providers as certain lines are Diesel Electric $30 managed by private companies, allowing for long term 48% 26% partnerships $20 $4 $4 $4 $4 $4 $10 $3 $3 $4 $4 $3 $3 $0 $3 $4 $4 $4 $5 $5 $5 $1 $2 $2 $3 -$10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Mainline $5,55,74,877 $5,68,83,324 $5,87,54,785 $6,12,51,864 $6,38,61,193 $6,57,77,029 $6,72,57,012 $6,88,71,180 $6,98,15,004 $7,10,57,806 $7,23,38,427 Metro & Light Rail $28,05,384 $29,71,144 $32,08,836 $34,33,454 $36,73,796 $38,20,748 $39,35,370 $40,73,108 $41,70,863 $43,04,330 $44,76,504 High Speed Rail $11,73,727 $18,20,708 $24,79,140 $29,00,593 $32,77,671 $36,70,991 $39,64,670 $43,21,491 $46,23,995 $49,01,435 $51,46,506 Source: Frost & Sullivan Analysis 8
  9. 9. Legal Disclaimer•Frost & Sullivan takes no responsibility for any incorrect information supplied to us bymanufacturers or users. Quantitative market information is based primarily on interviews andtherefore is subject to fluctuation. Frost & Sullivan research services are limited publicationscontaining valuable market information provided to a select group of customers. Ourcustomers acknowledge, when ordering or downloading, that Frost & Sullivan researchservices are for customers’ internal use and not for general publication or disclosure to thirdparties. No part of this research service may be given, lent, resold, or disclosed tononcustomers without written permission. Furthermore, no part may be reproduced, stored ina retrieval system, or transmitted in any form or by any means, electronic, mechanical,photocopying, recording or otherwise, without the permission of the publisher.• For information regarding permission, write to: Frost & Sullivan 331 E. Evelyn Ave. Suite 100 Mountain View, CA 94041 9

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