2025-05-06 15:27Summary of the Conference Call for Shen High-Speed (深高速) Company Overview - Shen High-Speed reported a revenue of 1.772 billion yuan for Q1 2025, with a net profit attributable to shareholders of approximately 478 million yuan, showing a slight year-on-year increase. The net profit after deducting non-recurring gains and losses grew nearly 16% year-on-year, with earnings per share at 0.203 yuan [2][4] Key Financial Performance - For the full year 2024, Shen High-Speed achieved a revenue of 9.25 billion yuan and a net profit of 1.15 billion yuan, with earnings per share at 0.411 yuan. The decline in profit was mainly due to reduced revenue from the joint venture in real estate and asset impairment provisions made at the end of 2024 [4] Toll Road Business - The toll road business remained stable, with daily toll revenue in the Shenzhen area increasing, particularly benefiting from the opening of new roads. The average daily toll revenue for the Yangtze River Highway increased by 18% [2][7] Environmental Business - Shen High-Speed is actively expanding its environmental business, with an organic waste processing capacity exceeding 6,900 tons per day. In Q1 2025, 17 projects were in commercial operation, processing 320,000 tons of waste and generating revenue of 174 million yuan. However, the overall environmental business is currently operating at a loss, and the company plans to be cautious in future investments in clean energy [2][8][21][22] Financing and Debt Management - The company completed a private placement in March 2025, raising approximately 4.7 billion yuan. Additionally, it raised 7.3 billion yuan through various debt instruments, optimizing its debt structure and reducing financing costs. The comprehensive borrowing cost was approximately 3.19% [2][9][26] Future Development Strategy - Shen High-Speed is focused on advancing key highway projects, including the Outer Ring Phase III and the expansion of the Guangshen Expressway. A new five-year development strategy has been initiated, with the Outer Ring Phase III expected to be completed by the end of 2029 [2][11][15][16] Internal Rate of Return (IRR) and Investment Strategy - The internal rate of return (IRR) requirement for toll road and environmental projects has been adjusted to 6%-7%, still above the industry average. The company remains open to acquiring quality toll road projects but emphasizes profitability and regional barriers [5][17][18] Shareholder Returns and Capital Expenditure - Shen High-Speed is committed to returning at least 55% of net profits to shareholders in cash dividends from 2024 to 2026, with expectations of exceeding 60% in 2024. The planned capital expenditure for 2025-2027 is approximately 20.6 billion yuan, primarily for the Outer Ring Phase III and other projects [5][25][24] Impact of Road Network Changes - The opening of new roads and other structural changes in the road network have had a mixed impact on traffic flow, with overall positive factors outweighing negatives. The company is monitoring these changes closely [14] Conclusion - Shen High-Speed is navigating a complex landscape with stable performance in its toll road business, ongoing challenges in its environmental sector, and a clear focus on strategic growth and shareholder returns. The company is poised for future developments while maintaining a cautious approach to investments and financing.