Investment Rating - The report assigns an "Accumulate" rating for Dongguan Holdings [3]. Core Views - Dongguan Holdings focuses on its core highway business, committing to absolute dividends to enhance shareholder returns. The company has been divesting non-core operations and is expected to maintain stable operations in its main business [1][7]. - The company has announced a shareholder return plan for 2025-2027, promising a minimum cash dividend of 0.475 CNY per share, which corresponds to an attractive dividend yield of 4.5% based on the latest closing price [7][43]. Financial Data and Valuation - Revenue projections for Dongguan Holdings show a significant decline in 2024, with total revenue expected to be 1.692 billion CNY, a 64% decrease from 2023. However, a gradual recovery is anticipated in subsequent years [2][47]. - The company’s net profit for 2024 is projected at 955 million CNY, with a compound annual growth rate (CAGR) of 7.4% from 2010 to 2024 [32][47]. - The company’s asset-liability ratio is 42.7%, indicating a relatively low level of debt compared to industry peers [41][42]. Business Overview - Dongguan Holdings operates the Dongguan-Shenzhen Expressway, which is a critical transportation artery in the Guangdong-Hong Kong-Macao Greater Bay Area, with a total length of 55.7 kilometers [11][18]. - The company has shifted its focus to core business operations, exiting from non-core sectors such as rail transit and trust businesses, thereby enhancing operational stability [7][49]. - The company’s revenue structure indicates that over 75% of its income is derived from transportation infrastructure, with the expressway business contributing the majority of gross profit [21][29]. Investment Opportunities - The report highlights that the return on investment (IRR) for the Dongguan-Shenzhen Expressway expansion project is estimated at 5.7%, which is above the industry average. The project is expected to be completed by December 2028 [38][39]. - The company’s commitment to dividends and its strong cash flow position suggest a robust capacity for shareholder returns in the future [41][43]. Profitability Forecast - The forecast for net profit from 2025 to 2027 is 911 million CNY, 906 million CNY, and 971 million CNY respectively, with a projected price-to-earnings (PE) ratio of 12x for 2025 [47][49]. - The gross margin for the expressway business is expected to remain stable, with projections of 72.4% for 2025 [46].