CMB International released a research report stating that maintaining the “buy” rating of Yuexiu Transport Infrastructure (01052), the profit forecast for 2024 and 2025 was lowered by 7% and 3% respectively, mainly due to the assumption that the company's gross margin declined due to traffic diversion and the decline in traffic flow forecasting on the Guangzhou North Second Ring Expressway (GNSR). The target price was lowered from HK$7.5 to HK$7.2.
According to the report, Yuexiu Transport Infrastructure's net profit in 2023 increased 69% year on year to 765 million yuan. After adjusting for 100 million yuan of non-cash impairment of the Shantou Bay Bridge, the company's nuclear profit increased 91% year over year to 865 million yuan, 10% and 8% lower than the bank's and market expectations, respectively. The bank expects that China Merchants Highway (001965.SZ)'s recent increase in Yuexiu Transportation Infrastructure shares will not only help support the company's stock price, but also mean progress in potentially injecting assets into Henan Pinglin Expressway.