Core Viewpoint - Zhejiang Hangzhou Bay Bridge (00576.HK) reported a closing price of 7.370 HKD as of July 3, down 0.67% from the previous trading day, with an intraday high of 7.480 HKD, marking a nearly one-year high [1] Group 1: Company Overview - Zhejiang Hangzhou Bay Bridge Company is a core member of Zhejiang Provincial Transportation Group and an important listed platform, established in March 1997 and listed on the Hong Kong Stock Exchange in May of the same year [1] - The company was set up to create financing channels connecting Zhejiang's transportation with international capital markets and to accelerate the construction of the provincial highway network, being the first state-owned enterprise from Zhejiang to list overseas [1] - The company aims to become a world-class enterprise, focusing on high-quality development driven by high-quality party building, and operates under three platforms: highway operation management, market-oriented infrastructure investment and financing, and asset securitization [1] Group 2: Corporate Values and Achievements - The company adheres to core values of "integrity, harmony, openness, and progress" and promotes a corporate spirit of "dedication, responsibility, and innovation" [2] - It has received numerous honors, including recognition as a benchmark enterprise by the State-owned Assets Supervision and Administration Commission and various provincial and national awards for its management and operational excellence [2] - The company has been recognized in international financial magazines for its governance and investor relations, achieving a high level of recognition in both the domestic highway industry and international capital markets [2]

Summary of Key Points Core Viewpoint - As of July 3, a total of 120 stocks reached their 52-week highs, indicating a strong market performance with notable leaders in the list [1]. Group 1: Top Performers - The top three stocks with the highest increase rates are: - 富誉控股 (Fuyou Holdings) at 90.76%, closing at 0.435 with a peak of 0.475 [1] - 信义能源 (Xinyi Energy) at 65.00%, closing at 1.200 with a peak of 1.980 [1] - 中国三三传媒 (China San San Media) at 42.86%, closing at 1.710 with a peak of 1.900 [1] Group 2: Additional Notable Stocks - Other notable stocks include: - ITE HOLDINGS at 34.21% increase, closing at 0.047 with a peak of 0.051 [1] - 星凯控股 (Xingkai Holdings) at 30.00%, closing at 0.480 with a peak of 0.650 [1] - 北京北辰实业股份 (Beijing Beichen Industrial) at 26.47%, closing at 0.940 with a peak of 1.290 [1] Group 3: Overall Market Trends - The overall trend shows a significant number of stocks achieving new highs, reflecting positive investor sentiment and market conditions [1].

Core Viewpoint - Zhejiang Hangzhou-Ningbo Expressway Co., Ltd. has shown a significant increase in stock price and positive capital flow, indicating strong market performance and investor confidence [1]. Group 1: Company Overview - Zhejiang Hangzhou-Ningbo Expressway Co., Ltd. is a core member of Zhejiang Provincial Transportation Group and an important listed platform, established in March 1997 and listed on the Hong Kong Stock Exchange in May of the same year [1]. - The company was created to connect Zhejiang's transportation with international capital markets and accelerate the construction of the provincial expressway network, being the first state-owned enterprise from Zhejiang to list overseas [1]. Group 2: Business Strategy and Goals - The company aims to become a world-class enterprise, focusing on high-quality development driven by high-quality party building, and operates under three platforms: expressway operation management, market-oriented infrastructure investment and financing, and asset securitization [1]. - The company emphasizes the dual drive of main business development and capital operation to establish itself as a leading professional expressway operating company [1]. Group 3: Corporate Values and Recognition - The company adheres to core values of "integrity, harmony, openness, and progress" and promotes a corporate spirit of "dedication, responsibility, and innovation" [2]. - It has received numerous honors, including recognition as a benchmark enterprise by the State-owned Assets Supervision and Administration Commission and various awards in the highway industry, reflecting its high recognition in both domestic and international capital markets [2].

Core Viewpoint - Morgan Stanley has raised the target price for Zhejiang Hu-Hang-Yong (00576.HK) by 4%, from HKD 6.8 to HKD 7.1, while maintaining a buy rating [1] Financial Performance - The company is conservatively expected to achieve a compound annual growth rate (CAGR) of 2-3% in revenue and net profit after tax (NPAT) for the fiscal years 2025/2026, primarily due to its significant exposure to Chinese export demand [1] - The company’s dividend per share is expected to remain flat, having increased to RMB 0.385 last year, with a projected dividend yield of 6.5% for the fiscal years 2025/2026, which is among the highest in the Chinese peer group [1] Market Performance - The company reported strong performance in Q1 2025, prompting an update to its financial model [1] - Year-to-date, the company's stock price has risen by 13%, significantly outperforming the CSI 300 index [1] - The strong performance is attributed to a shift in investor sentiment towards defensive stocks amid a macro environment characterized by trade tensions [1]

Financial Performance - The company's revenue for the first quarter of 2025 reached RMB 4,364,070 thousand, representing an increase of 9.06% compared to RMB 4,001,897 thousand in the same period of 2024[4] - The gross profit for the same period was RMB 1,904,172 thousand, up 10.5% from RMB 1,723,409 thousand year-on-year[4] - The net profit attributable to the company's owners was RMB 1,479,289 thousand, a 6.15% increase from RMB 1,393,689 thousand in the first quarter of 2024[7] - Basic earnings per share for the first quarter of 2025 was RMB 24.68, compared to RMB 23.25 in the same quarter of 2024, reflecting a growth of 6.16%[7] Assets and Liabilities - The total assets as of March 31, 2025, were RMB 75,447,770 thousand, compared to RMB 73,698,364 thousand as of December 31, 2024, indicating an increase of 2.38%[8] - The company's total liabilities as of March 31, 2025, were RMB 35,182,481 thousand, slightly down from RMB 35,218,026 thousand as of December 31, 2024[8] Cash Flow - The net cash flow from operating activities for the first quarter of 2025 was RMB 1,094,803 thousand, down 9.78% from RMB 1,213,923 thousand in the previous year[9] - The company reported a net cash outflow from investing activities of RMB (3,892,550) thousand, significantly higher than RMB (667,688) thousand in the same period last year, indicating increased investment activity[9] - The cash and cash equivalents at the end of the first quarter of 2025 were RMB 19,125,632 thousand, down from RMB 22,394,268 thousand at the end of the first quarter of 2024[9] Corporate Governance - The chairman of the company is Mr. Yuan Yingjie, and the executive directors include Mr. Wu Wei and Mr. Li Wei[11] - The company has independent non-executive directors including Mr. Becker Wei, Ms. Li Weicheng, and Mr. Yu Mingyuan[11] Future Plans - The company has plans for market expansion and new product development, although specific details were not disclosed in the earnings call[3]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [2][9]. Core Insights - The company benefits from the economic prosperity of Zhejiang Province, which supports long-term growth in traffic volume. The recent introduction of the new toll road management regulations is expected to enhance the asset duration for highway operating companies [5][37]. - The company has a strong position in the market with a significant number of toll road assets and a long remaining concession period, which is expected to drive revenue growth [8][45]. - Traffic volume growth is anticipated to drive high performance, with the company maintaining industry-leading profitability metrics [8][51]. Summary by Sections 1. Economic Environment and Regulatory Framework - Zhejiang Province ranks fifth in per capita GDP in China, with a high density of highways, supporting traffic volume growth. The number of private vehicles has grown at a CAGR of 8.5% from 2015 to 2023 [5][30]. - The new toll road management regulations are expected to extend the concession periods for highway operations, positively impacting asset duration [5][37]. 2. Company Position and Asset Quality - The company, established in 1996, focuses on toll road concessions primarily in Zhejiang Province, with a total asset scale of approximately 217.2 billion [8][42]. - The company controls 11 toll roads with a total operating mileage of 1,143 kilometers, benefiting from a long average remaining concession period of 6.17 years [8][45]. 3. Traffic Volume and Revenue Growth - The company’s revenue is primarily driven by toll road operations, with a projected revenue growth of 13.87% in 2023, followed by steady growth in subsequent years [6][51]. - Traffic volume is expected to increase due to regional economic recovery and ongoing acquisitions, with a significant contribution from the Shanghai-Hangzhou-Ningbo Expressway [8][63]. 4. Financial Projections and Valuation - The company’s projected net profits for 2025 to 2027 are estimated at 56.71 billion, 58.87 billion, and 61.49 billion respectively, with corresponding PE ratios of 7x, 6x, and 6x [6][9]. - The average PE valuation of comparable companies is 9x, indicating that the company is undervalued relative to its peers [9].

Financial Performance - The company reported a significant increase in revenue, achieving a total of RMB 1.2 billion, representing a growth of 15% year-over-year[5]. - The company reported a revenue of RMB 18,064.824 million for the year 2024, representing an increase from RMB 16,965.024 million in 2023, which is a growth of approximately 6.4%[22]. - The profit before tax for 2024 was RMB 8,857.582 million, up from RMB 7,851.538 million in 2023, indicating a growth of about 12.8%[22]. - The net profit attributable to the company's owners for 2024 was RMB 5,501.588 million, compared to RMB 5,223.679 million in 2023, reflecting an increase of approximately 5.3%[22]. - The basic earnings per share for 2024 was RMB 91.79, down from RMB 112.95 in 2023, which is a decrease of about 18.7%[22]. - The company achieved a return on equity of 11.9% in 2024, a decrease from 16.0% in 2023[23]. - Net profit attributable to shareholders rose by 5.3% to RMB 5.5159 billion, up from RMB 5.24 billion in the previous year[37]. - Total revenue for 2024 increased by 6.5% to RMB 18.064824 billion, compared to RMB 16.965024 billion in 2023[46]. Business Expansion and Strategy - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to RMB 1.32 billion[5]. - New product launches are expected to contribute an additional RMB 200 million in revenue, with a focus on innovative technologies[5]. - The company plans to expand its market presence by entering two new provinces, aiming for a 5% market share in these regions within the next year[5]. - A strategic acquisition of a local competitor is anticipated to enhance operational efficiency and is expected to generate cost savings of approximately RMB 50 million annually[5]. - The company aims to expand its core business and enhance competitiveness in the securities and financial services sector[12]. - The company is focused on acquiring quality projects to strengthen its position as an international investment holding enterprise in transportation infrastructure[12]. - The company plans to accelerate digital transformation and explore new industries in transportation infrastructure[39]. - The company aims to focus on highway expansion and seek quality investment and acquisition opportunities in 2025[39]. Operational Efficiency and Investments - The company is investing RMB 100 million in research and development for new technologies aimed at improving service delivery[5]. - The company aims to improve its EBITDA margin from 30% to 35% over the next two years through operational efficiencies[5]. - The company plans to allocate RMB 42.2 billion of the remaining raised funds for existing highway expansion projects[68]. - Capital expenditures for the period amounted to RMB 7.12 billion, with RMB 5.18 billion allocated for equity investments and RMB 1.02 billion for highway expansion projects[80]. Shareholder Returns and Dividends - A dividend payout ratio of 40% is planned for the upcoming fiscal year, reflecting the company's commitment to returning value to shareholders[5]. - The company declared a final dividend of RMB 0.32 per share, reflecting its commitment to returning value to shareholders[16]. - The company proposed a dividend of RMB 0.385 per share to reward shareholders[37]. - The company plans to distribute dividends of no less than 75% of the annual distributable profits for the years 2023 to 2025, with the dividend payout for the current period being 89.4% of the distributable profits[123]. Market and Economic Outlook - The company anticipates a moderate recovery in the global economy in 2025, despite facing uncertainties from trade policies and geopolitical risks[87]. - The highway business is expected to benefit from increased logistics demand due to China's economic recovery, while also facing challenges from rising costs and environmental regulations[88]. - The global economy is gradually recovering but faces uncertainties such as geopolitical conflicts and policy divergences among major economies, impacting traffic volume and toll revenue in the highway sector[93]. - Future economic growth remains uncertain, with potential impacts on consumer spending and investment demand, which are crucial for the highway toll business[93]. Risk Management and Compliance - The management highlighted key risks, including regulatory changes that could impact operations, which are being closely monitored[5]. - The company emphasizes the importance of adapting to regulatory changes that may affect its operations and financial outlook[97]. - Regulatory compliance in the securities business is critical, with potential penalties or restrictions that could adversely affect the company's financial condition and reputation[97]. - The company has implemented a disclosure policy to manage confidential data and monitor information disclosure, prohibiting unauthorized access to insider information[127]. Corporate Governance - The company has adopted strict corporate governance principles in accordance with the Listing Rules, ensuring compliance and operational integrity[101]. - The board of directors consists of nine members, including three independent non-executive directors, which represents at least one-third of the board[105]. - The company has established a governance framework that includes various committees to assist the board in fulfilling its responsibilities[110]. - The company has a comprehensive training program for its directors to ensure they remain informed and capable of contributing effectively[107]. - The company has established an internal control system to protect assets and ensure the authenticity of financial statements, continuously improving its internal control measures[124]. Employee and Operational Metrics - As of December 31, 2024, the total number of employees in the company is 10,271, with 4,969 in highway-related positions and 5,302 in securities-related positions[92]. - The average daily traffic on the Shaoxing section of the Yongjin Expressway was 31,004 vehicles, a year-on-year increase of 3.63%, generating toll revenue of RMB 564.46 million[62]. - The overall traffic volume increased by 2.4% year-on-year, with truck traffic growing by 2.81% and passenger vehicle traffic by 2.24%[49]. Acquisitions and Investments - The company completed the acquisition of a 34.2546% stake in Guodu Securities, making it the largest shareholder[19]. - The company completed the acquisition of the remaining 40% stake in Yonglan Expressway in January 2024, following a previous 60% acquisition in 2023[56]. - The company acquired the remaining 40% equity of Yonglan Company, achieving 100% ownership[16]. Environmental Initiatives - The company is actively expanding its green low-carbon initiatives, including the construction of distributed photovoltaic power generation projects along the Ningbo-Zhoushan Expressway[50]. - The company has initiated the construction of a new energy heavy-duty truck charging and swapping station project on the Yongjin Expressway, aiming to create the first domestic electric truck transport line for foreign trade containers[50]. - The company aims to expand its new energy business by developing a network of charging stations along highways and promoting green low-carbon transformation[89].

Group 1 - The company has entered into a preliminary agreement with Ningbo Zhoushan Port for the investment and implementation of the G92 Hangzhou Bay Ring Expressway project, specifically the section from Qijia Mountain in Ningbo to Jintang in Zhoushan, with an estimated investment of approximately RMB 15.985 billion [1] - The project will be funded with 45% as project capital, amounting to approximately RMB 7.193 billion, with the company and Ningbo Zhoushan Port contributing a combined 60% of the project capital [1] - A new company will be established to manage the project, which will have the concession rights for investment, financing, construction, operation, and management [1] Group 2 - The G92 Hangzhou Bay Ring Expressway project will span approximately 18.052 kilometers, connecting Ningbo and Zhoushan, and includes a 11.604-kilometer underwater tunnel and multiple interchanges [2] - This project is expected to enhance the traffic capacity and service level of the cross-sea passage between Ningbo and Zhoushan, alleviating traffic pressure on the existing cross-sea bridge and promoting regional economic and social development [2] - As the longest underwater tunnel road in Zhejiang Province, this project will help the company establish itself as a benchmark in the industry, enhancing its strategic position and reputation within the high-grade highway network [2]

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of 7.82 HKD [6][7]. Core Views - The company reported a revenue increase of 6.5% year-on-year to 18.1 billion RMB and a net profit increase of 5.3% year-on-year to 5.5 billion RMB for the fiscal year 2024. The fourth quarter saw a revenue increase of 10.8% and a net profit increase of 20% [1][2]. - The proposed dividend for the fiscal year 2024 is 0.385 RMB per share, representing a 20% increase year-on-year, with a dividend payout ratio of 42% and a corresponding dividend yield of approximately 6.75% [1][2]. - The company benefits from a favorable environment for high-dividend stocks in a low-interest-rate context, enhancing its investment appeal [1][2]. Revenue and Profitability - The company's toll road revenue and segment profit are expected to grow by 2.3% and 13.1% year-on-year, respectively, contributing approximately 72% to the net profit [2]. - The growth in truck and passenger vehicle traffic is driven by the economic prosperity in Zhejiang province, with GDP growth of 5.5% and total import and export growth of 7.4% [2]. Brokerage Performance - The brokerage segment experienced a significant improvement in profitability in Q4 2024, with a 32% year-on-year increase in segment profit, driven by a more active market following favorable policy changes [3]. - The overall contribution of the brokerage business to net profit for 2024 is approximately 14% [3]. Profit Forecast and Valuation - The net profit forecasts for 2025 and 2026 have been adjusted upwards by 2.6% and 0.6% to 5.71 billion RMB and 5.88 billion RMB, respectively, with a new forecast for 2027 introduced at 6.20 billion RMB [4]. - The target price has been raised to 7.82 HKD, reflecting an increase in the valuation of the Hong Kong financial sector and a decrease in the risk-free interest rate [4][11]. Financial Metrics - The company is projected to achieve an EPS of 0.95 RMB in 2025, with a PE ratio of 5.99 and a PB ratio of 0.70 [5][20]. - The dividend yield is expected to remain stable at 6.75% for the next few years [20].

Financial Performance - Revenue increased by 6.5% year-on-year, reaching RMB 18,064.82 million[3] - Profit attributable to owners of the company grew by 5.3% year-on-year, amounting to RMB 5,505.19 million[3] - Basic earnings per share were RMB 0.9179, down from RMB 1.1295 in 2023[3] - Proposed dividend per share is RMB 0.385, compared to RMB 0.32 in 2023[4] - Total comprehensive income for the year was RMB 7,761.87 million, compared to RMB 6,752.15 million in 2023[7] - The company reported a net profit of RMB 7,156.48 million, an increase from RMB 6,622.33 million in 2023[7] - The group's attributable profit was RMB 5.5159 billion, an increase of 5.3% year-on-year, while basic earnings per share decreased by 18.7% to RMB 0.9179[108] Revenue Breakdown - The group's revenue for the year ending December 31, 2024, is projected to be RMB 18,064,824 thousand, with a segment profit of RMB 7,156,478 thousand[30] - For the year ending December 31, 2023, the group's revenue was RMB 16,965,024 thousand, with a segment profit of RMB 6,622,330 thousand, indicating a year-on-year increase in revenue[30] - The highway business segment reported revenue of RMB 10,662,346 thousand for 2024, up from RMB 10,423,833 thousand in 2023, reflecting a growth of approximately 2.3%[30] - The securities business segment generated revenue of RMB 6,182,506 thousand in 2024, compared to RMB 6,372,289 thousand in 2023, showing a decline of about 3%[30] - Revenue from highway tolls amounted to RMB 10.662346 billion, up 2.3% year-on-year, with overall vehicle traffic increasing by 2.4%[86] - The group reported a significant increase in other business revenue, which rose by 622.3% to RMB 1.219972 billion[84] Costs and Expenses - Operating costs rose to RMB 10,812.36 million from RMB 9,765.69 million in 2023[5] - Financing costs decreased to RMB 1,741.65 million from RMB 2,104.13 million in 2023[5] - The company's income tax expense for 2024 was RMB 1,701,104 thousand, compared to RMB 1,229,208 thousand in 2023, reflecting an increase of approximately 38.4%[46] - The total interest expense for the year ended December 31, 2024, was RMB 2,104,129 thousand, compared to RMB 1,741,651 thousand in 2023, representing an increase of approximately 20.9%[44] Assets and Liabilities - Non-current assets decreased from RMB 71,258,072 thousand in 2023 to RMB 54,871,376 thousand in 2024, representing a decline of approximately 23.5%[12] - The company's total current assets decreased from RMB 145,924,295 thousand in 2023 to RMB 152,862,426 thousand in 2024, indicating a reduction of about 4.5%[14] - Current liabilities increased from RMB 108,265,977 thousand in 2023 to RMB 103,306,335 thousand in 2024, reflecting an increase of approximately 4.5%[16] - Non-current liabilities decreased from RMB 35,218,026 thousand in 2023 to RMB 44,022,354 thousand in 2024, showing a decline of about 20%[18] - The total liabilities increased from RMB 108,916,390 thousand in 2023 to RMB 104,427,467 thousand in 2024, indicating an increase of approximately 4.7%[16] - The total assets for the group as of December 31, 2024, are RMB 217,182,367 thousand, an increase from RMB 207,733,802 thousand in 2023[32] Investments and Acquisitions - The company completed the acquisition of the remaining 40% stake in Yonglan Expressway in January 2024, following a 60% acquisition in 2023[93] - The company is focusing on building smart transportation systems and green low-carbon industries, including the construction of intelligent expressways[94] - The company is accelerating the development of photovoltaic resources along its managed routes to support energy-saving and cost-reduction initiatives[131] Market and Economic Outlook - The outlook for 2025 indicates a moderate recovery in the global economy, but uncertainties remain, particularly regarding trade policies that could impact global trade dynamics[127] - The highway business is expected to benefit from increased logistics demand due to China's economic recovery, while facing challenges such as rising construction costs and stricter environmental regulations[128] - Zhejiang Province's GDP grew by 5.5% in 2024, supporting the group's highway traffic and toll revenue growth[88] Corporate Governance and Strategy - The company is actively responding to market management requirements, enhancing corporate governance, and improving information disclosure quality[96] - The company is focusing on digital transformation in internal control management to improve governance efficiency[131] - The company aims to enhance its investment capabilities by pushing forward high-quality expressway project investments and mergers and acquisitions[130] Cash Flow and Financing - The net cash inflow from operating activities was RMB 9.08203 billion during the period[112] - The remaining funds from the 2023 rights issue amounted to RMB 5.280 billion, with RMB 4.22 billion allocated for existing highway expansion projects[110] - The company plans to primarily rely on internal resources to fund capital expenditure commitments, with any shortfall to be addressed through debt and equity financing[120]