The important position of Yu-Bo Railway as the sea passage of the Central Plains Economic Zone has been recognized by the national planning. After the completion of the project, it will connect with China's existing north-south trunk railway and become an important passenger and freight trunk line from southern Shanxi, Henan, northern Anhui and northern Jiangsu to Shanghai, Nanjing and Hangzhou. It is not only conducive to the orderly export of coal and agricultural products in the Central Plains and northern Anhui, but also conducive to the products of the eastern region entering the vast central market, accelerating the integration of the central region and the Yangtze River Delta and optimizing the allocation of resources. it is of great significance to promote the economic development of western Henan, central Henan, northern Anhui and central Jiangsu. At present, the Yu-Bo Railway has been listed as a key project in Henan Province during the 12th five-year Plan period, and has been incorporated into the strategic development plan of the National Central Plains Economic Zone.
The total estimate of Yu-Bo railway is 15.85 billion yuan, which is divided into three phases. The first phase of the project, from Qixian to Xuchang, with an investment of 2.1 billion yuan, is now completed and is expected to open to traffic in the third quarter of 2013. the second phase of the project, the 224km section from Xuchang to Bozhou, with a total investment of 6.25 billion yuan, is basically completed. it is planned to start construction of the section from Xuchang to Qianling and from Qianling to Bozhou at the beginning and the end of 2013 respectively. The third phase of the project, 220km from Bozhou to Bengbu in Anhui Province, with an estimated investment of 7.5 billion yuan, is carrying out preliminary work.
The operation prospect of Yu-Bo railway is optimistic and the income is rich. The Henan Provincial Development and Reform Commission approved the freight of the Yu-Bo railway at 0.35 yuan / ton-km, and the initial planned capacity of the line was 12 million tons / year. We estimate that after completion, the actual transport volume may reach 20 million tons / year. Under the two assumptions of transport volume, the company can obtain equity income of 428 million yuan or 714 million yuan respectively, with huge profits, and there is an expectation that the railway property rights held will increase in value.
Profit forecast and rating. We believe that as a stock company, it is a high probability for the company to undertake orders for the second and third phases of Yu-Bo Railway, and temporarily maintain the profit forecasts with EPS of 0.11,0.13,0.15 yuan respectively from 2012 to 2014. It is suggested that we should actively pay attention to the company's new urbanization theme investment opportunities and follow-up newly signed orders.
