China Railway Group's (00390 HK)2020 revenue increased 14.6% YoY to RMB974.7 billion. Shareholders' net profit increased 6.4% YoY to RMB25.2 billion. Results were in line with expectation. Overall gross margin was down 0.2 ppts YoY to 9.3%. During 2020, the Company received RMB2,650.7 billion in new contracts, up 20.4% YoY. As at end of 2020, the Company had a total backlog of RMB3,726.0 billon, up 10.9% YoY.
We expect total revenue to increase at a CAGR of 9.6% in 2020-2023 and expect overall gross margin to be maintained at 9.5% in 2021-2023. In addition, we expect the Company's total expenses ratio to decline from 4.4% in 2021 to 4.2% in 2023, and ROE to stay between 10.2% and 10.4% in 2021-2023.
Our EPS estimates for 2021/2022/2023 are RMB1.104, RMB1.236 and RMB1.365, respectively. We expect that the government will continue to increase fixed assets spending in the 14h Five-Year Plan period, especially in transportation infrastructure, to maintain stable economic growth. TheCompany's more focused approach in urban rail transit infrastructure construction business should benefit the most from the expected investment boom in the urban rail transit market. Maintain the TP at HK$6.70, representing 4.8x/4.5x/5.3x 2021/2022/2023 EV/EBITDA. Maintain "Buy".