标题：Shenzhen ExpresswaySolid fundamentals new long-term positives
发布日期：2016-02-02 14:59:39
内容： Recurring earnings uptick despite net drop SZE expects its net profit to decline 20~40% YoY in 2015 toRmb1.31~1.75bn. Excluding non-recurring items, earningsgrowth is expected to be -23.2~+17.7%. We maintain ourforecast that recurring earnings may grow at a low single-digitpace in 2015. Trends to watch Provisions for asset impairment loss for QinglianExpressway to strengthen future profitability. QinglianExpressway posted lower-than-expected earnings due to thediversion impact. After evaluation, SZE set aside Rmb620mn forasset impairment loss and this is expected to reduce net profit byRmb390mn in 2015. In the long term, however, this can helpstrengthen profitability. We estimate the reduction ofamortization will likely raise earnings 1% in both 2016 and 2017. Solid fundamentals. Traffic volume increased 11% YoY inDecember 2015, flat with November but faster than October’s9.3% and September’s 8.4%. Toll revenue (excluding jointventures and associated companies) increased 5.2% YoY inDecember 2015 (vs. November’s 4.1% and October’s 0.5%).Looking forward, we believe SZE may continue to post decenttraffic volume thanks to the milder impact from traffic diversionfrom Yanpai, Yanba and Qinglian expressways. Equity incentive plan a long-term positive. SZE introducedan equity incentive plan in January. This should help motivatemanagement and improve operating efficiency. High value of Meilinguan project. We estimate the value ofthe project at about Rmb3bn, equivalent to Rmb1.35/sh. Valuation and recommendation We cut 2015/16 earnings forecasts by 21%/3%,implying recurring earnings growth of 2%/10%. SZE-A/-H nowtrade at 14.3x/9.8x 2016e P/E. Risks Traffic volume growth
发布日期：2016-02-02 14:59:39
内容： Recurring earnings uptick despite net drop SZE expects its net profit to decline 20~40% YoY in 2015 toRmb1.31~1.75bn. Excluding non-recurring items, earningsgrowth is expected to be -23.2~+17.7%. We maintain ourforecast that recurring earnings may grow at a low single-digitpace in 2015. Trends to watch Provisions for asset impairment loss for QinglianExpressway to strengthen future profitability. QinglianExpressway posted lower-than-expected earnings due to thediversion impact. After evaluation, SZE set aside Rmb620mn forasset impairment loss and this is expected to reduce net profit byRmb390mn in 2015. In the long term, however, this can helpstrengthen profitability. We estimate the reduction ofamortization will likely raise earnings 1% in both 2016 and 2017. Solid fundamentals. Traffic volume increased 11% YoY inDecember 2015, flat with November but faster than October’s9.3% and September’s 8.4%. Toll revenue (excluding jointventures and associated companies) increased 5.2% YoY inDecember 2015 (vs. November’s 4.1% and October’s 0.5%).Looking forward, we believe SZE may continue to post decenttraffic volume thanks to the milder impact from traffic diversionfrom Yanpai, Yanba and Qinglian expressways. Equity incentive plan a long-term positive. SZE introducedan equity incentive plan in January. This should help motivatemanagement and improve operating efficiency. High value of Meilinguan project. We estimate the value ofthe project at about Rmb3bn, equivalent to Rmb1.35/sh. Valuation and recommendation We cut 2015/16 earnings forecasts by 21%/3%,implying recurring earnings growth of 2%/10%. SZE-A/-H nowtrade at 14.3x/9.8x 2016e P/E. Risks Traffic volume growth
