Core Viewpoint - The company reported better-than-expected performance for 1H25, with revenue and net profit both increasing by 14.9% year-on-year, driven by higher toll revenue and a significant decrease in financial expenses [1][2]. Financial Performance - 1H25 revenue reached 2.1 billion yuan, a year-on-year increase of 14.9% [1]. - Net profit attributable to shareholders was 360 million yuan, also up 14.9% year-on-year, exceeding expectations [1]. - The company declared an interim dividend of 0.12 HKD per share, maintaining the same level as 1H24, with a payout ratio of 50.6% [1]. Revenue Growth Drivers - Toll revenue for 1H25 was 2.06 billion yuan, reflecting a 15.2% year-on-year increase, attributed to several factors: 1. The consolidation of Pinglin Expressway contributed 260 million yuan to toll revenue [1]. 2. The impact of construction on Wuhuang Expressway led to a 56.6% increase in toll revenue for Hanhe Expressway [1]. 3. The expansion project on Hanyi Expressway resulted in a 17.3% increase in toll revenue for Hancai Expressway [1]. 4. The low base effect from adverse weather conditions in the same period last year [1]. Cost and Margin Analysis - Operating costs increased by 22.8% year-on-year, with intangible asset amortization rising by 26.3%, outpacing revenue growth [2]. - The gross margin decreased by 3.4 percentage points to 46.8% [2]. - Financial expenses decreased by 11.1% year-on-year, benefiting from lower market interest rates, with a weighted average interest rate of 2.6% in 1H25 compared to 3.15% in 1H24 [2]. Long-term Growth Potential - The company is focused on reinvesting in its core business, with the acquisition of Pinglin Expressway expected to strengthen its central road network [2]. - The core asset expansion in Guangzhou and potential group asset injections are anticipated to provide ongoing growth [2]. - The dividend policy remains stable, with a projected dividend payout ratio of 58.5% in 2024, suggesting attractive dividend yields of 6.9% and 7.3% for 2025 and 2026, respectively [2]. Profit Forecast and Valuation - The company has adjusted its net profit forecasts for 2025 and 2026 upwards by 3.4% and 4.3%, respectively, to 739 million yuan and 770 million yuan [2]. - The current stock price corresponds to a price-to-earnings ratio of 8.5 times for 2025 and 8.0 times for 2026 [2]. - The target price has been raised by 4.3% to 4.34 HKD, reflecting a 9.0 times price-to-earnings ratio for 2025 and 8.5 times for 2026, indicating a potential upside of 6.1% from the current stock price [2].

Core Viewpoint - CICC has raised the net profit forecast for Yuexiu Transportation Infrastructure for 2025 and 2026 by 3.4% and 4.3% to 739 million and 770 million HKD respectively, due to the continuous reduction in financial expenses [1] Financial Performance - The company reported 1H25 revenue of 2.1 billion HKD, a year-on-year increase of 14.9%, and a net profit attributable to shareholders of 360 million HKD, also up 14.9%, exceeding CICC's expectations [2] - The increase in revenue was primarily driven by higher toll income and a significant decrease in financial expenses [2] Toll Revenue Growth - In 1H25, toll revenue reached 2.06 billion HKD, reflecting a year-on-year growth of 15.2%, supported by several factors including the contribution of 260 million HKD from the consolidation of Pinglin Expressway [3] - The company experienced a 56.6% increase in toll revenue from Han-Ezhou Expressway due to construction impacts, and a 17.3% increase from Han-Cai Expressway due to expansion works [3] Cost and Financial Management - Operating costs increased by 22.8% year-on-year in 1H25, with intangible operating rights amortization rising by 26.3%, leading to a decline in gross margin by 3.4 percentage points to 46.8% [3] - Financial expenses decreased by 11.1% year-on-year, benefiting from lower market interest rates, with a weighted average interest rate of 2.6% compared to 3.15% in 1H24 [3] Dividend Policy and Growth Potential - The company maintains a stable dividend policy, with a dividend of 0.12 HKD per share in 1H25, consistent with 1H24, and a payout ratio of 50.6% [2] - Long-term growth is expected from core assets and the acquisition of Pinglin Expressway, with projected dividend yields of 6.9% and 7.3% for 2025 and 2026 respectively [4]