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社区
会员
机构：中金公司
研究员：Wenjie ZHANG/Qibin FENG/Xin YANG
Yuexiu Transport Infrastructure announced its 2024 results: Revenue fell 2.5% YoY to Rmb3.87bn, and attributable net profit dropped 14.2% YoY to Rmb657mn, largely in line with our expectation of Rmb659mn. In 2H24, revenue grew 0.4% YoY to Rmb2.04bn, and attributable net profit increased 1.4% YoY to Rmb343mn.
The firm paid a dividend of HK$0.25/sh in 2024 (including interim dividends), implying a dividend payout ratio of 58.5%.
Trends to watch
Toll revenue fell YoY; profit under pressure due to rapid cost increase. Profit declined in 2024, mainly due to following factors:
1) Revenue: Toll revenue from road assets controlled by the company fell 1.4% YoY in 2024 due to weather factors, fewer toll collection days, changes in road network, and macroeconomic conditions. Revenue from core road asset Guangzhou Beierhuan Expressway dropped 6.2% YoY, mainly due to the opening of the adjacent Congpu Expressway.
2) Cost: The firm amortizes road asset franchises based on forecasts for vehicle traffic. According to its estimates, the amortization of intangible assets rose 18.5% YoY in 2024, weighing on the profitability of the road asset business amid slow revenue growth, and the firm's gross margin fell 6.5ppt YoY in 2024.
3) Investment income: Guangzhou Beierhuan Expressway in which the firm holds a stake expires in March 2024, and the project recorded an investment loss of Rmb46mn in 2024 (vs. investment income of Rmb86mn in 2023).
We expect new road assets to generate earnings in 2025. The firm completed the acquisition of a 55% stake in Henan Pinglin Expressway on November 26, 2024. According to its announcement, Pinglin Expressway's revenue and after-tax profit were Rmb482mn and Rmb119mn in 2023, and the firm estimates its equity IRR at 9.2%. We estimate the new asset will generate earnings of around Rmb70mn in 2025.
The firm maintains healthy cash flow and steady dividend payments; we see long-term growth potential. In the long term, we believe the extension of Guangzhou Beierhuan Expressway and the new asset Henan Pinglin Expressway will continue to bolster the firm’s growth. It has stable operations and ample cash flow (operating cash flow of Rmb2.66bn and cash on hand of Rmb1.98bn in 2024), and we expect its capex to be about Rmb2bn in 2025. We expect the firm to maintain reasonable dividend payments (Rmb384mn in 2024, implying a dividend payout ratio of 58.5%). If its dividend payout ratio sustains 58.5%, we estimate that the firm's dividend yields will be 7.2% and 7.6% in 2025 and 2026, which are attractive.
Financials and valuation
Given the acquisition of the new asset, we raise our 2025 net profit forecast 3.3% to Rmb715mn and introduce our 2026 net profit forecast of Rmb739mn. The stock is trading at 8.1x 2025e and 7.7x 2026e P/E. We maintain an OUTPERFORM rating and our TP of HK$4.16, given lower risk appetite towards the expressway sector in the market. Our TP implies 9.2x 2025e and 8.7x 2026e P/B with 12.7% upside.
Risks
Disappointing progress in road reconstruction and extension; slower-than- expected economic growth; sharper-than-expected traffic diversion for expressway networks.
