Sichuan Express(SH:601107) Huachuang Securities·2024-03-15 16:00Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 6.28 CNY, representing a potential upside of approximately 20% from the current price of 5.23 CNY [1]. Core Insights - The company plans to increase its dividend payout ratio to no less than 60% from 2023 to 2025, marking a significant step towards joining the high-dividend tier in the industry [4][25]. - The average dividend payout ratio for the company from 2020 to 2022 was 31%, with a notable increase to 40% in 2022. The new commitment positions the company just behind Guangdong Expressway A's 70% and equal to Shandong Expressway and Anhui Expressway's 60% [4][25]. - The report emphasizes that increasing the dividend payout can create a virtuous cycle of "dividend-market value-assets," benefiting investors, the company, and the group as a whole [4][20]. Financial Projections - The company is projected to achieve net profits of 1.16 billion CNY, 1.28 billion CNY, and 1.38 billion CNY for the years 2023, 2024, and 2025, respectively, with corresponding earnings per share (EPS) of 0.38 CNY, 0.42 CNY, and 0.45 CNY [23][24]. - The expected revenue for 2023 is 11.79 billion CNY, reflecting a year-on-year growth rate of 19% [23]. - The report indicates that the dividend yield for 2023 and 2024 is expected to be 4.4% and 4.8%, respectively, based on the new payout ratio [20][24]. Strategic Developments - The company has acquired the second ring road of Chengdu, enhancing its sustainable development capabilities and expanding its road network [11][35]. - The acquisition is supported by a seven-year performance commitment from the major shareholder, indicating strong backing for the company's future growth [13][36]. - The company is also exploring innovative business opportunities, such as acquiring assets related to electric vehicle charging stations, to diversify its revenue streams [20][35].