Group 1 - China's high-speed rail operating mileage has surpassed 50,000 kilometers, marking a new milestone in high-speed rail development as the Xi'an to Yan'an high-speed rail line officially opened on December 26 [1][3] - The CR450 train set has entered the testing phase, achieving a record relative meeting speed of 896 kilometers per hour, further solidifying China's leading position in high-speed rail globally [3] - Sichuan Chengyu plans to acquire 85% of Hubei Jingyi Expressway Co., Ltd. for 2.409 billion yuan in cash, which will make Jingyi a subsidiary of Sichuan Chengyu upon completion of the transaction [1][3] Group 2 - The annual cargo volume of the Haoji Railway has exceeded 100 million tons, achieving this milestone 14 days earlier than the previous year, while the Wari Railway has also surpassed 100 million tons for the third consecutive year [4]

Core Viewpoint - Sichuan Chengyu plans to acquire 85% stake in Jingyi Expressway for cash, which is expected to enhance dividend yield by 2026 [1] Group 1: Company Overview - Sichuan Chengyu is the only publicly listed platform for expressways under Shudao Group, leveraging the group's substantial resources for development [1] - Shudao Group, a provincial state-owned enterprise, has total assets reaching 1.5 trillion yuan by the end of 2024, with over 500 wholly-owned and controlled enterprises [1] Group 2: Business Operations - Shudao Group operates over 11,400 kilometers of expressways and 6,700 kilometers of railways, covering investment, construction, and operation in both sectors [1] - The company is focused on expanding its road network and improving cost efficiency, with significant synergy potential from its rich road asset resources [1] Group 3: Financial Projections - The projected net profit for Sichuan Chengyu from 2025 to 2027 is estimated at 1.61 billion, 1.96 billion, and 2.17 billion yuan respectively [1] - The current price-to-earnings (PE) ratios are expected to be 11.8, 9.7, and 8.8 times for the years 2025, 2026, and 2027 [1] - With a 60% dividend payout ratio, the expected dividend yields are approximately 5.1%, 6.2%, and 6.9% for the same years [1]

Investment Rating - The investment rating for Sichuan Chengyu (601107.SH) is "Buy" (maintained) [5] Core Views - The company plans to acquire 85% of the equity of Jingyi Expressway for cash of 2.409 billion yuan, which is expected to enhance the dividend yield starting in 2026 [7] - The acquisition is anticipated to solidify the company's revenue stream, as Jingyi Expressway has shown stable profitability with a projected net profit of approximately 1.92 billion yuan in 2024 and 1.49 billion yuan in the first seven months of 2025 [7] - The company is expected to achieve a net profit of 1.613 billion yuan in 2025, with a growth rate of 10.58%, and a projected dividend yield of around 5.1% in 2025, increasing to 6.2% in 2026 and 6.9% in 2027 [7] Financial Summary - The company's total revenue is projected to be 11.220 billion yuan in 2025, with a year-on-year growth rate of 8.28% [6] - The net profit attributable to the parent company is expected to reach 1.613 billion yuan in 2025, with a corresponding earnings per share (EPS) of 0.53 yuan [6] - The company's return on equity (ROE) is forecasted to be 8.47% in 2025, increasing to 9.90% in 2026 [6][8]

Investment Rating - The report maintains a "Strong Buy" rating for Sichuan Chengyu (601107) [1] Core Views - The company plans to acquire 85% of Hubei Jingyi Expressway Co., Ltd. for a total cash consideration of 2.409 billion yuan, avoiding equity dilution and ensuring stable earnings growth [6] - The acquisition is expected to enhance the company's profitability and dividend capacity, with projected net profits from the acquired asset reaching 2.4 billion yuan in 2026, 2.5 billion yuan in 2027, and 2.7 billion yuan in 2028 [6] - The report emphasizes the company's strategy of integrating high-quality road assets to strengthen its core business and enhance shareholder returns [6] Financial Summary - Total revenue projections for 2024, 2025, 2026, and 2027 are 10,362 million yuan, 9,946 million yuan, 10,246 million yuan, and 10,717 million yuan respectively, with a year-on-year growth rate of -11.1%, -4.0%, 3.0%, and 4.6% [2] - Net profit attributable to shareholders is forecasted to be 1,459 million yuan in 2024, 1,630 million yuan in 2025, 1,728 million yuan in 2026, and 1,867 million yuan in 2027, reflecting growth rates of 22.9%, 11.7%, 6.0%, and 8.1% respectively [2] - Earnings per share (EPS) are projected to be 0.48 yuan in 2024, 0.53 yuan in 2025, 0.56 yuan in 2026, and 0.61 yuan in 2027 [2] Valuation Metrics - The target price is set at 7.70 yuan for A-shares and 6.81 HKD for H-shares, indicating a potential upside of 24% and 27% from the current prices respectively [3] - The price-to-earnings (P/E) ratio is expected to decrease from 13 in 2025 to 10 in 2027, while the price-to-book (P/B) ratio is projected to remain stable at around 0.9 [2][3]