Investment Rating - The report initiates coverage with a "Buy" rating for Jiangsu Ninghu Expressway [5][6][47] Core Views - Jiangsu Ninghu Expressway is the only listed toll road company in Jiangsu Province, with 18 road and bridge projects under direct operation and investment, covering over 910 kilometers of opened road and bridge mileage [5][12] - The company has shown steady growth in revenue and profit, with a projected net profit growth of 12% year-on-year for 2024, primarily driven by toll road operations [5][14] - The company maintains a robust dividend policy, with cash dividends exceeding 2 billion RMB annually since 2015, and is expected to continue this trend [5][22] - The report highlights the company's strong asset quality and location advantages, particularly in the economically vibrant Yangtze River Delta region [5][38] Financial Data and Profit Forecast - Revenue projections for 2023 to 2027 are as follows: - 2023: 15,192 million RMB - 2024: 23,198 million RMB - 2025E: 23,935 million RMB - 2026E: 24,730 million RMB - 2027E: 25,436 million RMB - Year-on-year growth rates for revenue are projected at 14.61% for 2023, 52.70% for 2024, and moderate growth thereafter [2][30] - Net profit forecasts for the same period are: - 2023: 4,413 million RMB - 2024: 4,947 million RMB - 2025E: 5,447 million RMB - 2026E: 5,790 million RMB - 2027E: 6,049 million RMB - Corresponding PE ratios are projected at 11.62 for 2023, decreasing to 8.48 by 2027 [2][30][34] Revenue Structure - The toll road business consistently contributes over 70% of total revenue, with a significant portion of gross profit derived from this segment [5][19] - In 2024, the revenue breakdown is expected to be 77% from toll road operations, 14% from supporting services, and 6% from electricity sales [5][19] Investment Assumptions - The core assumption for revenue growth is based on increasing traffic volumes on the core asset, the Huning Expressway, with expected growth rates of 6% for 2025 and 2026, and 5% for 2027 [7][27] - Operating costs are anticipated to grow at a modest rate of 2% annually, reflecting stable operational conditions [28] Valuation - The report notes that Jiangsu Ninghu Expressway's H shares are trading at a significant discount compared to its A shares, with a PE ratio of 9x for H shares versus 16x for A shares [34] - The dividend yield for H shares is currently at 5.61%, making it an attractive investment option [34]