China Merchants Highway (001965) Quarterly Comment: Stable Performance, Smart Transportation Holds Probability of Cancelling Provincial Stations

China Merchants Highway (001965) Quarterly Comment: Stable Performance, Smart Transportation Holds Probability of Cancelling Provincial Stations

The company disclosed the results of the three quarterly reports for 19 years, and its operating income increased by 24.

51% to 56.

20 trillion, an increase of 8 in a single quarter.

20% to 19.

32 trillion; net profit attributable to mother gradually increased by 9.

59% to 33.

21 trillion, a single quarter increase of 0.


The sharp decline in profit growth in Q3 was mainly due to the elimination of the base effect brought about by the merger and acquisition of highways last year, and the same quarter investment income fell by zero.

390,000 yuan, non-operating expenses in the single quarter increased by 0.

3.5 billion.

Single quarter revenue increased by 8.

20%, the performance of the road industry portfolio is stable. In April and July of 2018, the company consolidated the Yuqian, Shanghai-Chongqing and Pufu expressways. 19Q3 was the first quarter in which the consolidation effect was eliminated.

We disaggregated 19H1 to exclude new consolidated road products, and the income from existing road products increased by about 5%, referring to Q3 revenue8.

The 2% growth rate, and the revenue accounted for toll revenue accounted for more than 60%, it is estimated that the growth rate of toll revenue in 19Q3 remained stable.

Prospective layout of emerging businesses, and with the promotion of ETC transition, the capital expenditures of road enterprises toll gate reform, gantry installation and other capital expenditures will bring depreciation costs.

The company’s smart transportation segment seized the opportunity to cancel provincial stations, actively deployed the engineering reform business of highway tolls, and increased incremental income to hedge the depreciation costs of the company’s toll highway segment.

Investment income fell by 4 in the same quarter.

70%, well-controlled expenditures 19Q3 net investment income of the company was 7.

8.3 billion, a decrease of 0 a year.

3.9 billion, a decrease from the previous month.

8.7 billion, considering the new shareholding companies in Q2, it is expected that Q3 investment income is mainly a financial recognition disturbance, so the growth rate will pick up.

At the end of the 19Q3 quarter, the scale of long-term interest-bearing debt increased by 3.

7%, while the interest rate expense in the third quarter fell by 19%.

2%, mainly due to the use of low-interest-rate convertible debt to replace high-interest-rate banks.

Management expenses fell by 8 quarter-on-quarter.

0%, the three fees total decreased by 1 compared with the previous month.


The profit forecast and investment recommendations consider that the company’s road product quality is excellent, and the growth trend of emerging businesses is relatively optimistic. Without considering the extension landing, it is expected that the net profit attributable to mothers will be 43 in 2019-2021.

3, 47.

8, 52.

200 million, corresponding to PE of 11.

8, 10.


8 times.

In the long run, the company’s road product reserves are sufficient, the remaining operating life is extended, and the entire industry chain operation enables road products to make profits. According to the DCF calculation, the reasonable value is about 9.

58 yuan / share, maintain “Buy” rating.

Risk Warning: The growth of highway traffic is lower than expected, the operating performance of reinvested projects is lower than expected, the expansion of transportation technology business is lower than expected, and the photovoltaic power generation business causes the electrical impact to exceed expectations.