HTSC·2026-03-30 08:15Investment Rating - The investment rating for the company is "Buy" (maintained) for both A-shares and H-shares [7]. Core Views - The company's revenue for 2025 is reported at 6.722 billion RMB, a decrease of 12.68% year-on-year, while the net profit attributable to shareholders is 1.877 billion RMB, a slight decrease of 1.57%. However, the net profit excluding non-recurring items increased by 6.69% to 1.789 billion RMB [1][2]. - The growth in net profit is primarily driven by the acquisition of the Fuzhou and Suxu expressways, optimization of truck toll rates starting from Q2, and favorable weather conditions that improved traffic [1][2]. - The company plans to distribute a tax-inclusive dividend of 0.66 RMB per share, maintaining a payout ratio of 60%, which corresponds to a dividend yield of 4.3% for A-shares and 5.2% for H-shares [1]. Revenue and Profit Growth - The company's toll revenue for 2025 increased by 31% (non-revised basis), mainly due to the acquisition of the Fuzhou and Suxu expressways. On a comparable basis, toll revenue grew by 13.3% [2]. - The completion of the Xuan-Guan project expansion led to a 181% increase in toll revenue for the Xuan-Guan, Guan-Ci, and Guan-De North sections. Other sections saw a 4.0% increase in toll revenue [2]. Cost and Profitability - The company's gross profit increased by 544 million RMB (non-revised basis), with the newly acquired expressways contributing approximately 66% to this increase. However, the growth rate of gross profit (7.8%) was lower than that of toll revenue (13.3%) due to rising depreciation and maintenance costs [3]. - Financial expenses increased by 160 million RMB year-on-year, primarily due to expanded debt from external investments and increased interest expenses following the completion of the Xuan-Guan project [4]. Financial Forecast and Valuation - The forecast for net profit attributable to shareholders has been raised by 13% and 16% for 2026 and 2027, respectively, to 2.164 billion RMB and 2.004 billion RMB. A forecast for 2028 has also been introduced at 1.865 billion RMB [5]. - The target prices based on DCF valuation are set at 18.7 RMB for A-shares and 17.0 HKD for H-shares, with a WACC of 4.8% for A-shares and 6.2% for H-shares [5].