Core Viewpoint - The 2025 China International Service Trade Fair (CIFTIS) has commenced in Beijing, focusing on supply chain and transportation services, showcasing the latest technologies and innovations in smart public transport and logistics [1] Group 1: Event Overview - The supply chain and transportation services exhibition runs from September 10 to September 14, themed "People Enjoy Their Travel, Goods Flow Smoothly" [1] - The exhibition features two main areas: smart public transport and smart logistics services, along with a promotional event on new paradigms in transportation services for megacities [1] Group 2: Key Participants and Innovations - Notable participants include leading companies such as COSCO Shipping, China Foreign Trade, and Meituan, with over 500 top enterprises showcasing their innovations [1] - The exhibition highlights the "Beijing Plan" for megacity traffic governance and global supply chain innovations, with several companies presenting their first-ever products in digital transportation and green technology [1] Group 3: Technological Highlights - The debut of "first set" technologies is a significant highlight, with Jingtou Yijiajie showcasing automatic ticketing machines and smart passenger flow control systems [2] - COSCO Shipping presents blockchain bills of lading and automated terminal technologies, emphasizing digital innovation in international shipping [2] Group 4: Interactive Experiences - The exhibition includes immersive interactive points, featuring technology experiences in collaboration with companies like Meituan and WeRide, allowing attendees to engage with smart public transport and shared mobility applications [2]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, indicating challenges in its investment operations and overall performance [1][2][3]. Financial Performance - In H1 2025, the company achieved operating revenue of 5.663 billion yuan, a year-on-year decrease of 5.36%, and a net profit attributable to shareholders of 2.504 billion yuan, down 7.56% [1]. - For Q2 2025, the company recorded operating revenue of 2.860 billion yuan, a decline of 3.45%, and a net profit of 1.175 billion yuan, down 16.98% [1]. Segment Analysis - **Investment Operations Segment**: - Revenue was 4.478 billion yuan, down 7.23%, accounting for 79.07% of total revenue, with a gross profit of approximately 1.801 billion yuan, down 12.61%, and a gross margin of 40.22%, a decrease of 2.48 percentage points [2]. - Factors affecting performance included the exit of Bozhou-Fu Highway, road diversions, and differentiated toll policies [2]. - **Traffic Technology Segment**: - Revenue was 0.915 billion yuan, down 0.83%, accounting for 16.15% of total revenue, with a gross profit of approximately 0.105 billion yuan, down 13.27%, and a gross margin of 11.44%, a decrease of 1.64 percentage points [2]. - **Intelligent Traffic Segment**: - Revenue was 0.152 billion yuan, up 24.39%, accounting for 2.68% of total revenue, with a gross profit of approximately 0.003 billion yuan, down 70.32%, and a gross margin of 2.18%, a decrease of 6.95 percentage points due to rapid cost growth [2]. - **Traffic Ecosystem Segment**: - Revenue was 0.119 billion yuan, up 5.47%, accounting for 2.10% of total revenue, with a gross profit of approximately 0.017 billion yuan, up 12.56%, and a gross margin of 13.99%, an increase of 0.88 percentage points [2]. Profitability and Investment Returns - The overall gross margin for H1 2025 was approximately 34.00%, a decrease of 2.89 percentage points [3]. - Total expenses for H1 2025 were approximately 1.170 billion yuan, down 10.14%, with financial expenses decreasing by 15.79% due to reduced interest-bearing liabilities and lower borrowing rates [3]. - Investment income for H1 2025 was approximately 2.353 billion yuan, a slight increase of 0.27% year-on-year [3]. Growth Outlook - The company is viewed as a leading platform in highway operations with strong growth potential in two areas: 1. The core highway asset business, which is expected to contribute significant performance growth due to a younger asset base compared to peers [3]. 2. The highway industry chain business, focusing on smart traffic and traffic technology, which has considerable external business expansion potential [3]. Profit Forecast and Investment Rating - The company is projected to achieve net profits attributable to shareholders of 5.562 billion yuan, 6.010 billion yuan, and 6.308 billion yuan for 2025-2027, representing year-on-year growth of 4.50%, 8.06%, and 4.95%, respectively [4]. - Corresponding price-to-earnings ratios are expected to be 12.8x, 11.8x, and 11.3x [4]. - The company is recognized for its excellent operational management capabilities and high dividend distribution, maintaining a "buy" rating [4].

Core Viewpoint - The company is issuing a public offering of technology innovation corporate bonds aimed at professional investors, with a total face value not exceeding 5 billion RMB, as part of a larger registration of up to 10 billion RMB approved by the China Securities Regulatory Commission [4][5]. Financial Situation - As of March 31, 2025, the company's net assets amounted to approximately 90.22 billion RMB, with a consolidated debt-to-asset ratio of 43.45% and a parent company debt-to-asset ratio of 29.38% [4]. - The average distributable profit over the last three accounting years was approximately 564.99 million RMB, with net profits for 2022, 2023, and 2024 being 486.07 million RMB, 676.66 million RMB, and 532.22 million RMB respectively [5]. - For the first quarter of 2025, the company reported revenue of approximately 280.27 million RMB, a year-on-year decrease of 7.24%, while net profit was approximately 150.04 million RMB, a year-on-year increase of 4.16% [5]. Bond Issuance Details - The bond issuance is exclusively for institutional investors, with individual investors not permitted to participate [6][7]. - The bonds will be listed and traded on the Shenzhen Stock Exchange, and the company will apply for listing as soon as the issuance is completed [7]. - The bonds will be issued at a fixed interest rate of 1.92% with a term of three years [18]. Rating and Compliance - The issuer has received a credit rating of AAA with a stable outlook from China Chengxin International Credit Rating Co., Ltd. [8]. - The bonds will be subject to annual tracking ratings during their term [8]. Market Context - The company operates in a competitive transportation sector, facing challenges from other modes of transport such as rail and air, which may impact highway traffic volumes [9]. - The company's intangible assets, primarily highway concession rights, were valued at approximately 85.35 billion RMB as of the end of 2024 [9]. Corporate Governance - Recent changes in the board of directors include resignations and new appointments, ensuring compliance with the new Company Law and enhancing governance structures [16][18].

Core Viewpoint - The credit rating of China Merchants Highway Network Technology Holdings Co., Ltd. is maintained at AAA with a stable outlook, reflecting its strong operational capabilities and financial stability despite some challenges in its smart transportation business [3][5][6]. Financial Overview - Total assets increased from 1,149.39 billion in 2022 to 1,591.69 billion in 2024, while total liabilities rose from 472.64 billion to 703.88 billion during the same period [3][22]. - The company's net profit for 2024 is projected to be 59.36 billion, down from 72.16 billion in 2023, indicating a decline in profitability [3][21]. - The EBITDA for 2024 is expected to be 119.57 billion, showing growth from 98.04 billion in 2023 [3][21]. Business Operations - The company operates a significant network of toll roads, with a total of 1,832.19 kilometers of toll roads under its control as of 2024 [9][11]. - The company has a strong geographical advantage, with most of its toll roads located on major national and provincial highways [3][9]. - The smart transportation business has seen a decline in performance, which may impact the overall credit status of the company [3][6]. Investment and Growth Strategy - The company is focusing on expanding its core highway investment while also diversifying into traffic technology and ecological projects [8][14]. - The acquisition of Road King (China) Construction Co., Ltd. has increased the company's operational mileage by 276 kilometers [7][9]. - The issuance of REITs has improved the company's investment management capabilities, allowing for better capital allocation [7][8]. Industry Context - The highway transportation demand is expected to maintain growth due to ongoing infrastructure improvements and government policies aimed at stabilizing the economy [5][6]. - The industry is facing challenges such as increased competition and regulatory changes, which may affect toll revenue and operational efficiency [5][6][14]. - The overall credit level of highway operation companies is projected to remain stable despite the low growth rate in industry demand [6][19].