Investment Rating - The report maintains a "Strong Buy" rating for Sichuan Chengyu (601107) [1] Core Views - The company achieved a year-on-year revenue growth of 15.78% in the first three quarters of 2025, with continuous optimization of financial expenses, highlighting the undervalued assets with expected discrepancies [1] - The report emphasizes the significant reduction in financial expenses, which decreased by 31.9% to 428 million yuan, enhancing profits [6] - The company has secured long-term operational rights for its core profitable assets through major infrastructure projects, which are expected to improve revenue [6] Financial Summary - **Revenue Forecasts**: - Total revenue for 2024A is projected at 10,362 million yuan, with a decline to 9,946 million yuan in 2025E, followed by a slight recovery in subsequent years [2] - Year-on-year growth rates are expected to be -11.1% in 2024A, -4.0% in 2025E, 3.0% in 2026E, and 4.6% in 2027E [2] - **Net Profit Forecasts**: - The net profit attributable to the parent company is forecasted to be 1,459 million yuan in 2024A, increasing to 1,630 million yuan in 2025E, and further to 1,728 million yuan in 2026E [2] - Year-on-year growth rates for net profit are projected at 22.9% for 2024A, 11.7% for 2025E, 6.0% for 2026E, and 8.1% for 2027E [2] - **Earnings Per Share (EPS)**: - EPS is expected to be 0.48 yuan in 2024A, increasing to 0.53 yuan in 2025E, 0.56 yuan in 2026E, and 0.61 yuan in 2027E [2] - **Valuation Ratios**: - The price-to-earnings (P/E) ratio is projected to decrease from 12 in 2024A to 9 in 2027E, while the price-to-book (P/B) ratio remains stable at around 0.9 to 0.8 [2] Investment Recommendations - The report maintains profit forecasts of 1.63 billion yuan for 2025, 1.73 billion yuan for 2026, and 1.87 billion yuan for 2027, with corresponding EPS of 0.53, 0.57, and 0.61 yuan [6] - The target price is set at 7.70 yuan for A-shares and 6.74 HKD for H-shares, indicating a potential upside of 35% from the current price [6] - The company is positioned as a growth-oriented dividend asset, with a commitment to a 60% dividend payout ratio for 2024 [6]

Investment Rating - The report maintains a "Strong Buy" rating for Sichuan Chengyu [2][6] Core Views - The report emphasizes that there is still a significant expectation gap in the market regarding Sichuan Chengyu, despite its strong performance in revenue growth and cash dividends [6][8] - The analysis is based on four dimensions: asset quality, dividend capability, earnings growth certainty, and future growth potential [6][8] Summary by Relevant Sections 1. Asset Quality - The company's road assets are strategically located, with toll revenue growth and profitability ranking among the industry leaders [9][13] - The overall profitability of the company's road assets is high, with a projected toll gross margin of 59.6% for 2024, second only to Guangdong Expressway and Anhui Expressway [21][24] - The company has achieved a compound annual growth rate (CAGR) of 11% in toll revenue over the past three years, indicating strong revenue resilience [15][16] 2. Dividend Capability - The company has increased its dividend payout ratio to over 60% in 2023, maintaining a dividend yield of 5.05%, making it the only highway stock in A-shares with a yield above 5% [30][39] - The peak of capital expenditure may have passed, with a projected free cash flow of 650 million yuan in 2024, indicating a stronger and sustainable internal cash dividend capability [9][30] 3. Earnings Growth Certainty - Future earnings growth is expected to be driven by natural growth in traffic and toll revenue, with financial expenses likely to decrease significantly [9][10] - The company has a seven-year performance commitment for the second ring road, providing substantial growth support and profit elasticity in the medium to long term [10][11] 4. Growth Potential - The company is seen as undervalued in terms of growth potential, supported by the classic logic of "large group, small company" [10][11] - The integration of high-quality road resources with the support of the Shudao Group is ongoing, which is expected to enhance the company's market value [10][11] 5. Investment Recommendations - The report maintains profit forecasts for 2025-2027 at 1.58 billion, 1.71 billion, and 1.84 billion yuan, with corresponding earnings per share (EPS) of 0.52, 0.56, and 0.60 yuan [10][11] - The target price is set at 7.75 yuan for A-shares and 6.01 HKD for H-shares, indicating a potential upside of 35% and 39% respectively from current prices [10][11]

Investment Rating - The report maintains a "Strong Buy" rating for Sichuan Chengyu [2][8] Core Views - The report emphasizes that there is still a significant expectation gap in the market regarding Sichuan Chengyu, despite its strong performance in revenue growth and cash dividends [6][8] - The analysis is based on four dimensions: asset quality, dividend capability, earnings growth certainty, and future growth potential [6][8] Summary by Relevant Sections 1. Asset Quality - The company's road assets are strategically located, with toll revenue growth and profitability ranking among the industry leaders. The toll revenue has a compound annual growth rate (CAGR) of 11% over the past three years, second only to China Merchants Highway [6][9] - The overall profitability of the company's road assets is also among the highest in the industry, with a toll gross margin of 59.6% in 2024, just behind Guangdong Highway and Anhui Expressway [9][21] 2. Dividend Capability - The company has shown a strong commitment to returning value to shareholders, with a dividend payout ratio increased to over 60% in 2023 and maintained in 2024, resulting in a dividend yield of 5.05%, making it the only highway stock in A-shares with a yield above 5% [6][30] - Capital expenditures are expected to decline, with a projected free cash flow of 650 million in 2024, indicating a stronger and sustainable internal cash dividend capability [9][30] 3. Earnings Growth Certainty - Future earnings growth is expected to be driven by natural growth in traffic and toll revenue, with financial expenses likely to decrease significantly. The company is expected to benefit from a long-term interest rate decline [9][10] - The company has a seven-year performance commitment for the second ring road, providing significant growth support and profit elasticity in the medium to long term [9][10] 4. Growth Potential - The company is seen as undervalued in terms of growth potential, with a low asset securitization rate compared to other provinces. The integration of high-quality road resources with the support of the Shudao Group is ongoing [9][10] - The report draws parallels with Anhui Expressway, which has successfully achieved a virtuous cycle of "market value-dividend-assets" since 2021, suggesting a similar path for Sichuan Chengyu [9][10] 5. Investment Recommendations - The report maintains profit forecasts for 2025-2027 at 1.58 billion, 1.71 billion, and 1.84 billion, with corresponding earnings per share (EPS) of 0.52, 0.56, and 0.60, and price-to-earnings (PE) ratios of 11, 10, and 10 times [10][11] - The target price is set at 7.75 yuan for A-shares and 6.01 HKD for H-shares, indicating a potential upside of 35% and 39% from the current prices, respectively [10][11]