Core Viewpoint - CICC has raised the net profit forecast for Yuexiu Transportation Infrastructure (01052) for 2025 and 2026 by 3.4% and 4.3% to 739 million and 770 million yuan respectively, due to continuous reduction in financial expenses [1] Financial Performance - The company reported 1H25 revenue of 2.1 billion yuan, a year-on-year increase of 14.9%, and a net profit attributable to shareholders of 360 million yuan, 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, the company achieved toll revenue of 2.06 billion yuan, a year-on-year increase of 15.2%, benefiting from several factors including the consolidation of Pinglin Expressway and the impact of construction on other highways [3] - The toll revenue from Han-Ezhou Expressway increased by 56.6% due to construction impacts, while Han-Cai Expressway saw a 17.3% increase [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, attributed to a drop in market interest rates, with a weighted interest rate of 2.6% in 1H25 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 strategic acquisitions, with projected dividend yields of 6.9% and 7.3% for 2025 and 2026 respectively, indicating attractive returns for investors [4]

Core Insights - The opening of the Wuhan to Songzi Expressway (Wusong Expressway) marks a significant milestone for Wuhan, as the total length of expressways in the city surpasses 1000 kilometers, enhancing the urban comprehensive transportation system [1][3] Group 1: Infrastructure Development - The Wusong Expressway is a key transportation project during Hubei Province's 14th Five-Year Plan, consisting of five segments with a total length of approximately 222 kilometers, providing a vital connection between various counties and Wuhan [2][3] - The Wuhan segment of the Wusong Expressway is 10.888 kilometers long, featuring seven bridges and designed for a speed of 120 km/h, which will alleviate traffic pressure on existing highways [2][3] Group 2: Economic Impact - The completion of the Wusong Expressway is expected to significantly reduce travel time between Wuhan and surrounding areas, with the journey to Honghu now taking only one hour instead of two [3] - Hubei Province's transportation investment reached 1041.6 billion yuan in the first half of 2025, ranking third nationally and first in Central China, indicating a robust growth in infrastructure investment [4] Group 3: Future Projections - Hubei aims to achieve a transportation investment target of 200 billion yuan in the second half of 2025, focusing on major transportation projects and enhancing logistics efficiency [6] - The ongoing construction of the remaining segment of the Wusong Expressway is expected to be completed by 2026, further improving connectivity and travel times in the region [3]

Group 1 - The company participated in the 2025 Hubei Province Listed Companies Investor Collective Reception Day on June 12, 2025, engaging with investors and addressing their concerns within the scope of information disclosure [1] - The Han-Yi Expressway expansion project was approved in September 2024 and commenced in January 2025, with an estimated construction period of four years [1][2] - The company has made systematic arrangements for the capital and funding needs of the Han-Yi Expressway expansion project [2] Group 2 - The company is actively promoting the public REITs project based on the Daguangbei Expressway, which is currently under review by the National Development and Reform Commission [3] - The company has established a shareholder return plan for the next three years (2025-2027), committing to distribute at least 30% of the net profit attributable to shareholders in cash each year [4] - The company aims to enhance its investment value through focused operations, capital management, and improved investor relations [4] Group 3 - The company reported a weighted average return on equity of 9.15% for 2024, positioning it above the average level among A-share listed companies in the expressway sector [4] - The company is exploring investment opportunities in quality road and bridge assets and will adhere to disclosure obligations regarding significant asset acquisitions [5]