Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.22, down from the previous target of HKD 5.34 [6][9]. Core Views - The company's net profit for the first half of 2024 was below expectations, primarily due to weak traffic growth and a significant increase in amortization expenses [1][2]. - Revenue for 1H24 was recorded at RMB 1.827 billion, a year-on-year decrease of 5.6%, while net profit attributable to shareholders was RMB 314 million, down 26.5% year-on-year [1][2]. - The decline in net profit is attributed to reduced toll collection days, adverse weather conditions, and insufficient transportation demand [1][2]. - The company plans to distribute an interim dividend of HKD 0.12 per share, a decrease of 20% year-on-year, with a dividend payout ratio of 58.5% [1]. Summary by Sections Financial Performance - The company's toll revenue decreased by 5.1% in 1H24, with a notable impact from a 3-day reduction in toll collection days for passenger vehicles [2]. - The core asset, Guangzhou North Second Ring, saw a toll revenue decline of 7.4% due to traffic diversion from the newly opened Pu Highway [2]. - Operating costs increased by 8.3% year-on-year, with amortization costs rising by 10.1%, leading to a 16% decline in gross profit [3]. Future Outlook - The second half of 2024 is expected to be complex due to changes in the road network, including the impact of the Pu Highway on Guangzhou North Second Ring and the closure of Wuhuang Highway for upgrades [4]. - There is potential for traffic volume improvement driven by macroeconomic policies, which may enhance transportation demand [4]. Earnings Forecast - The report has revised down the net profit forecasts for 2024, 2025, and 2026 by 20%, 15%, and 22% respectively, now projecting RMB 646 million, RMB 743 million, and RMB 721 million [1][11]. - The estimated earnings per share (EPS) for 2024 is projected at RMB 0.39, with a price-to-earnings (PE) ratio of 10x based on historical averages [9][11].
越秀交通基建：1H净利低于预期，静待车流量改善