Shenzhen Expressway (600548): Tax deduction welcomes good deductions but not in line with expectations

Shenzhen Expressway (600548): Tax deduction welcomes good deductions but not in line with expectations

1H19, income +10 for ten years.

81%, net profit attributable to mother +10 for ten years.

79%, deducting non-performance results are in line with expectations On August 23, the company released its 2019 Interim Report: 1) Revenue increased slightly by 0.

81% to 26.

9.9 billion, net profit attributable to mothers increased by 62.

79% to 15.

77 ‰, deducting the cost of diabetes and returning to 5.

$ 1.2 billion 9.

97% to 10.

65 ppm; 2) Deductions are in line with expectations (our earnings forecast is 10.

6.6 billion).

The profit growth mainly comes from: 1) Yanjiang Company completed the capital injection, confirmed the deferred income assets for the previous recoverable reorganization and asset impairment, and increased the net profit by about 5.

1.2 billion; 2) Transfer Guilong land and increase net profit by about 1.

4 billion.

We adjusted the company EPS to 1 for 2019/20/21.



20 yuan, raise the target price to 12.


20 yuan, upgrade to “Buy” rating.

The growth of toll revenue was slightly sluggish, and the decline in financial expenses was faster than expected in the first half of the year. After replacing the impact of the three project repurchase, the company’s toll revenue increased by 3.

95% of which the tolls of Jihedong, Jihexi, along the river, Qinglian, Shuiguan, and Wuhuang Expressway increase by +1 each year.

1%, +1.

8%, +17.

0%, +9.

0%, -0.

8%, +5


In addition to the high-speed growth along the Yangtze River in Shenzhen, due to the saturation of production capacity at Jihe Expressway and landslide maintenance at Shuiguan Expressway, the traffic growth rate was slightly sluggish.

In the first half of the year, the company’s financial expenses decreased by 2 each year.

31 trillion, after adding back the derivative income generated by the foreign exchange lock-up, the overall financial expenses decreased by 2.

US $ 3.6 billion, mainly due to the reduction in the size of borrowings for the repurchase of three projects, and the average interest rate was 4 from the same period last year.

70% dropped to 4.


Yanjiang Company completed the budget optimization, and the expenditure expenses were largely reversed. In order to improve the financial status of Yanjiang Company, Shenzhen Expressway Group injected US $ 4.1 billion in Yanjiang Company in the second quarter, mainly to transfer the syndicated loan of Yanjiang Company to the Group.

Before the capital injection, Yanjiang Company continued to expand continuously, forming a scale of off-balance-sheet deductions; after the capital injection, the future profitability of Yanjiang Company is expected to improve significantly, so the previous part can be made up, and the depreciation compensation for road asset impairment is confirmedAssets, a corresponding increase in net profit of about 5.

1.2 billion, which is a one-time benefit.

The Group’s credit rating is higher than that of Yanjiang Company, and the loan interest rate is relatively high.
We expect the comprehensive interest rate to decline further after the group takes over the loan.
In the second half of the year, Meilinguan real estate was delivered in a concentrated manner. ETC toll discounts and equipment upgrades affected the controllable diversified business.

We expect the Meilinguan 佛山桑拿网 project to be delivered at the end of the year. Assuming that the first phase of the housing is carried forward by 50%, the project will contribute about 2 net profits.

100,000 yuan.

Affected by the state’s cancellation of the provincial border toll station policy, the company will complete the transformation of ETC equipment in the second half of the year, and the capital expenditure is expected to be 4.

3.8 billion; Guangdong ETC discount adjusted from 98% to 5% from July.

In the short term, investment cash expenditures increase, but in the long term, charging efficiency improves and labor costs (1H19 is 1).

4.1 billion) is expected to decline.

We expect the multi-year impact of ETC discount changes on Guangdong rates to be -2.

5% (2H19), -3.

4% (1H20), -0.

8% (2H20), but increased efficiency and lower rates are expected to attract new traffic.

Raise target price to 12.


20 yuan, upgrade to “buy” rating because the tax deduction is better than expected, we adjust the 2019/20/21 return to mother net profit forecast to 27.



1.2 billion (previous 21).



4.4 billion).

We raise our target price to 12 based on the segment valuation method.


20 yuan (previous time 11.


00 yuan).

High dividends are attractive.

Assuming a dividend rate of 45%, we expect the company’s 2019/20/21 dividend to replace 6.

08% / 5.

38% / 5.

83% (closing price 20190823).

Upgrade to Buy rating.

Risk reminder: The traffic flow is growing faster than expected, and environmental protection projects and Meilinguan projects are not progressing as expected.