Sichuan Express(SH:601107) Huachuang Securities·2024-09-01 12:17Investment Rating - The report maintains a "Strong Buy" rating for Sichuan Chengyu (601107) with a target price of 6.3 CNY, indicating an expected upside of 33% from the current price [1]. Core Insights - The company's total revenue for H1 2024 was 5.368 billion CNY, a decrease of 5.46% year-on-year, while gross profit remained flat at 1.594 billion CNY. The net profit attributable to shareholders decreased by 10.47% to 698 million CNY, and the net profit after deducting non-recurring items decreased by 4.16% to 674 million CNY [1]. - The toll revenue, which is the main business, remained stable with a slight decline of 1.89% to approximately 2.326 billion CNY, attributed mainly to a decrease in average toll income despite a 1.5% increase in traffic volume [1]. - The company is in the process of acquiring 85% of Hubei Jingyi Expressway, which is expected to enhance operational capacity and reflect strong resource support from the controlling shareholder, Shudao Group [1]. Financial Summary - For H1 2024, the company reported a significant reduction in financial expenses, with a total of 420 million CNY, a year-on-year increase of 3.7%. However, Q2 financial expenses decreased by 36% to 210 million CNY, indicating effective cost control [1]. - The report forecasts net profits for 2024-2026 to be 1.28 billion CNY, 1.39 billion CNY, and 1.55 billion CNY respectively, with corresponding EPS of 0.42 CNY, 0.46 CNY, and 0.51 CNY, and PE ratios of 11, 10, and 9 times [2][5]. - The company plans to increase its dividend payout ratio to 60% from 2023 to 2025, marking a significant step in its "dividend-market value-asset" cycle [1]. Market Performance - The stock price as of August 30, 2024, was 4.73 CNY, with a total market capitalization of approximately 14.465 billion CNY [3][5].