Jinwu Financial News | According to the HSBC Global Research and Development Report, road passenger traffic and freight volume in Anhui Province are expected to increase 44% and 6% year-on-year respectively in fiscal year 2023, and traffic volume will grow steadily. The Anhui Provincial Department of Transportation also predicts that highway traffic will increase steadily by about 13% during the Spring Festival travel season. The Hening Expressway, the main asset of the Anhui Wantong Expressway (00995), is in a period of growth. Operating costs are relatively low, and the return on equity (ROE) is expected to be higher than that of its peers.
The bank anticipates that the company will carry out further asset acquisitions and increase the dividend payout ratio in fiscal year 2024. The highway widening project in Anhui Province is progressing smoothly, and some highway expansions will be completed in 2025. There are also expansion projects starting in 2025 or 2026. The company's dividend payout ratio for FY2023 remained above 60%, and there is potential room for growth.
The bank believes that the company will continue to lead the way in toll revenue growth, keep the profit forecast for the 2023 fiscal year unchanged, and raise the profit forecast for the 2024-2025 fiscal year to RMB 1.09 and RMB 1.21. Increase the target price of H shares by 9% from HK$10.1 to HK$9.2, maintaining the “buy” rating. Due to its good location, Anhui is optimistic about the company's prospects and is expected to benefit from an upgrade in China's manufacturing capacity as the economy recovers.