Custom research to support and enable client to entire the Chinese rolling stock servicing and maintenance market.

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 Report
Presented to:
-XXX 31st January 2011
-XXX

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
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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 Traction
Rolling 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
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4. Key economic targets of the 12th Chinese five year plan includes a
strong 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
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5. The Chinese rail market for both freight and passenger segment has
a strong correlation with growth in Chinese economy (Annual GDP).
The relationship between GDP growth and rail traffic (China), 1990-2010
25.0%
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
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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
18,731
Mainline Mainline Electric Mainline Diesel High Speed Rolling Metro & Light Rail
Stock
2010 2010 2020 2020
Source: Chinese MOR, Frost & Sullivan Analysis
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7. Market Share of leading Market Participants across the Chinese Rolling
Stock 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
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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
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