Summary of China Expressway Equities Conference Call Industry Overview - The conference call focused on the **China Expressway sector**, discussing potential investment opportunities and challenges in the upcoming quarters, particularly in **4Q25** [1] Key Points and Arguments Market Performance - Since July 2025, sector share prices have fluctuated between **-16% to +1%**, while the Hang Seng Index (HSI) increased by **+9%** [2] - The sell-off was attributed to: 1. Soft toll growth 2. Investors' risk-on sentiment 3. Company-specific risks, including major shareholder sell-offs and earnings revisions [2][4] Investment Opportunities - There is a potential opportunity in **4Q25** as dividend yields are expected to return to an attractive range of **6-7%** [2] - The expressway sector saw a share price rally of **5-15%** in **4Q24** [2] Catalysts for Growth - Expected catalysts include: 1. Stable dividend policies leading to attractive yields [3] 2. Potential revisions to the Toll Road Ordinance 3. Asset injections, particularly from Jiangsu Expressway's Suxichang South Expressway, which has shown strong traffic growth [3] Toll Growth Projections - Despite soft toll growth in **2H25**, projections for toll growth are as follows: - **Zhejiang Expressway**: -2% - **Jiangsu Expressway**: +1% - **Anhui Expressway**: +10% [4][11] Company Ratings and Preferences - The preferred companies in the sector are: - **Anhui Expressway**: Rated as **Buy** for better-than-peer toll income growth and high dividend yield - **Zhejiang Expressway**: Rated as **Buy** due to potential upside from its securities business and upcoming A-share listing - **Jiangsu Expressway**: Rated as **Hold** due to concerns over road expansion projects and uncertain returns from greenfield projects [5][8] Financial Metrics and Valuations - Current and target prices for key companies are as follows: - **Anhui Expressway - H**: Current price **HKD 11.35**, Target price **HKD 15.70** (Buy, +38.3% upside) - **Anhui Expressway - A**: Current price **RMB 12.92**, Target price **RMB 19.70** (Buy, +52.5% upside) - **Zhejiang Expressway**: Current price **HKD 7.26**, Target price **HKD 7.70** (Buy, +6.1% upside) - **Jiangsu Expressway - H**: Current price **HKD 9.27**, Target price **HKD 10.50** (Hold, +13.3% upside) [6][11] Dividend Policies - Companies are expected to maintain stable dividend payouts: - **Anhui Expressway**: Minimum **60%** payout ratio for 2025-27 - **Zhejiang Expressway**: Expected stable dividends of **RMB 0.49** for 2025-27 - **Jiangsu Expressway**: Expected stable absolute dividends [11][30] Risks and Challenges - Key risks include: - Slower-than-expected traffic volume growth - Uncertainties related to government policies affecting toll income and logistics costs - Potential negative impacts from road expansion projects [30][21] Conclusion - The China Expressway sector presents both opportunities and risks, with a focus on stable dividends and potential growth catalysts in the near future. Investors are advised to consider the specific company ratings and market conditions when making investment decisions [21][30]