According to a research report released by Xiaomo, Zhejiang Shanghai and Hangzhou Ningbo (0.58%) (00576) the traffic volume growth of toll roads in the first half of this year was lower than expected, and the profit growth of brokerage business slowed, all of which posed downside risks to management guidance. Since the beginning of this year, the traffic flow of major highways has slowed down, especially the toll revenue growth of Shanghai-Hangzhou and Shanghai-Hangzhou Expressway has turned negative since the second quarter of this year. The bank lowered its target price for Shanghai, Hangzhou and Ningbo from HK $9 to HK $7.5, maintaining a "neutral" rating.

The bank pointed out that management guidelines for toll revenue, the existing highway year-on-year growth of 6%, while the newly acquired (Shenjia-Hu-Hangzhou highway) increased by only 10%. If this operating trend continues, there is a potential downside risk. In addition, Zheshang Securities's profit growth slowed significantly to 3.5% in July, compared with double-digit growth in the first half of the year.

The bank said that the basic earnings per share forecast for 2019 and 2020 for Shanghai and Hangzhou Ningbo are roughly in line with market expectations. Although the bank's forecast for dividend per share is 6% and 11% lower than market expectations, it still expects Shanghai and Hangzhou Ningbo to keep its dividend flat on a per share basis as in the past. After the recent mergers and acquisitions, taking into account the level of debt, dividends have limited room for surprise.