Maintain an increase in holdings rating. The company is the only listed road and bridge company in Jiangsu Province. The business area is located in the Yangtze River Delta. The road production area is superior and traffic is busy. Traffic growth resumed in 2023 and performance reached a record high. Performance grew steadily under the 2024Q1 high base. Maintain the company's 2024-25 EPS forecast of 0.98/1.07 yuan, and add the 2026 EPS forecast of 1.15 yuan. The 2024 dividend rate is estimated at 6.1%. Maintain the company's target price of HK$10.27.

Traffic growth resumed in 2023, and the performance reached a record high. The company dominates the Southern Jiangsu Expressway network, holding and participating in 17 road and bridge projects, and the toll mileage exceeds 910 kilometers. In 2023, the company's revenue increased 18.5% year on year: net profit to mother was 4.4 billion yuan, a record high, up 18.5% year on year. Among them, toll revenue accounted for over 60%, an increase of nearly 30% over the previous year. 1) Volume: Benefiting from the release of suppressive demand for buses after the epidemic, the company's road network traffic increased 49% year on year, 21% increase compared with the same road production volume in 2019:2) Price: Due to changes in the ratio of passengers and goods, unit prices declined in the short term.

Under the 2024Q1 high base, the company's performance achieved steady growth. In 2024Q1, the company's revenue fell slightly by 4% year on year: net profit to mother was 1.2 billion yuan, up 1.6% year on year. Among them, revenue from the main toll road business increased 2% year on year. The low growth rate was mainly due to the high base effect, the impact of rain and snow, and the return to normal passenger and cargo ratios, which led to a year-on-year decline in unit prices. Among them, traffic volume on the Jiangsu section of the Shanghai-Nanjing Expressway fell slightly by 0.04% year on year, and tolls fell nearly 5% year on year: traffic volume on the Ningchang Expressway increased by nearly 8% year on year, and tolls increased 1.5% year on year: the Wufengshan Bridge benefited from the completion of the renovation and expansion of the Beijing-Shanghai Expressway. Traffic volume increased by 43% year on year, and tolls increased by more than 55% year on year

Investment in the main highway industry is progressing steadily, and dividends per share are rising steadily. The company maintained a high dividend policy of RMB 0.46 per share in the five years of 2018-22, and plans to increase the dividend per share to RMB 0.47 in 2023, corresponding to a dividend ratio of 53.65%. Investment in the company's main business is progressing steadily. The construction of the Longtan Bridge, North Link, and the southern section of the Xiyi Expressway is being built in an orderly manner, and active preparations are being made for the Jiangsu section of the Shanghai-Nanjing Expressway. Well-located road property renovation and expansion will extend the company's operating period and guarantee long-term returns. At the same time, the company initiated a 65% share acquisition of Suxi-Changnan Expressway, which will enhance the size of the company's assets in the Sunan Road network and eliminate the impact of diversion. The company has continued to rationally reinvest and acquire over the years to balance long-term road and bridge revenue capacity with short-term profit performance. Assuming that the cash dividend per share is maintained in 2024, the current dividend rate is estimated to be 6.1%.

Risk warning: economic fluctuations, industry policies, reinvestment risks, market style changes, etc.