招商公路深度报告：公路运营平台龙头，乘公路改革风起

Investment Rating - The report maintains a "Buy" rating for China Merchants Expressway Network & Technology Holdings Co Ltd (CME) [4] Core Views - CME is the largest highway operator in China by market capitalization and operating mileage, with a total operating mileage of 14,745 km as of 2023 [2] - The company has achieved rapid growth through both organic expansion and acquisitions, with a CAGR of 17.4%, 27.9%, and 11.9% for total assets, revenue, and net profit from 2014 to 2019 [2] - CME maintains a high dividend payout ratio, with a 54% payout in 2023 and a commitment to maintain a payout ratio of at least 55% from 2022 to 2024 [2] - The company's highway investment and operation business is expected to continue expanding, with 24 controlled highways and 26 invested highway companies, 16 of which are listed [2] - The highway industry chain business, including transportation technology and smart transportation, contributed 31% of revenue and 15% of gross profit in 2023, potentially becoming a second growth curve [2] - The highway sector is seen as a defensive asset with stable returns, especially in a low-interest-rate and low-risk-preference environment [2] - The upcoming revision of the Highway Toll Management Regulations is expected to extend toll collection periods, potentially boosting sector valuations [2] Summary by Sections Company Overview - CME is the largest highway operator in China, with a total operating mileage of 14,745 km as of 2023 [2] - The company has a strong track record of growth, with a CAGR of 17.4%, 27.9%, and 11.9% for total assets, revenue, and net profit from 2014 to 2019 [2] - CME maintains a high dividend payout ratio, with a 54% payout in 2023 and a commitment to maintain a payout ratio of at least 55% from 2022 to 2024 [2] Highway Investment and Operation - CME controls 24 highways with an average remaining toll collection period of 13.1 years, and is expanding its portfolio through acquisitions [2] - The company has invested in 26 highway companies, 16 of which are listed, and holds board seats in most of them, influencing dividend decisions [2] - The Beijing-Tianjin-Tanggu Expressway is undergoing expansion, expected to be completed by 2026, which will extend its toll collection period and enhance profitability [2] Highway Industry Chain - The transportation technology and smart transportation businesses contributed 30.1 billion yuan in revenue (31% of total) and 530 million yuan in gross profit (15% of total) in 2023 [2] - The smart transportation market is expected to grow significantly, with projections of 1.6 trillion yuan by 2024 and 10.6 trillion yuan by 2030 [26] Investment Strategy - The highway sector is seen as a defensive asset with stable returns, especially in a low-interest-rate and low-risk-preference environment [2] - The sector has historically outperformed during market downturns and periods of low economic growth expectations [2] Regulatory Catalysts - The upcoming revision of the Highway Toll Management Regulations is expected to extend toll collection periods, potentially boosting sector valuations [2] - The new regulations could extend the maximum toll collection period to 40 years, up from the current 25-30 years [35] Financial Forecasts - CME's revenue is expected to grow from 97.31 billion yuan in 2023 to 163.49 billion yuan in 2026, with net profit projected to increase from 6.77 billion yuan to 6.73 billion yuan over the same period [3] - The company's PE ratio is forecasted to be 14.4x, 13.5x, and 12.5x for 2024, 2025, and 2026, respectively [3] Valuation and Recommendations - CME is valued at 14.4x, 13.5x, and 12.5x PE for 2024, 2025, and 2026, respectively, with a "Buy" rating due to its strong operational capabilities and high dividend payout [4]