occurrences

The company released its 2024 semi-annual report. With 2024H1, the company achieved revenue of 3.757 billion yuan, a year-on-year decrease of 8.92%, and realized net profit to mother of 0.774 billion yuan, a year-on-year decrease of 16.72%. Among them, in 2024Q2, the company achieved revenue of 1.719 billion yuan, a year-on-year decrease of 22.61%, and realized net profit to mother of 0.303 billion yuan, a year-on-year decrease of 37.77%.

Affected by multiple factors, H1 toll revenue fell 6% year over year

2024H1, the company's toll road business achieved revenue of 2.433 billion yuan, a year-on-year decrease of 6.35%, mainly due to frequent rain and snow in South China and central China in the first half of the year, a 3-day year-on-year increase in the free period for motorway minibuses on statutory holidays, and the increasing number of regular highways on March 21, 2024. Excluding the impact of Yichang Expressway, H1 toll revenue fell 1.4% year over year. The opening of the Shenzhen-China Corridor on June 30, 2024 has a positive drainage effect on the company's riverside expressway and locomotive highway, creating a certain diversion for external ring projects.

H1 Environmental business operating performance is poor

2024H1, the clean energy power generation business achieved revenue of 0.302 billion yuan, a year-on-year decrease of 13.22%. The main reason was that projects such as Baotou Nanfeng saw a decrease in power generation revenue due to rising abandoned wind rates and declining wind resources; food waste disposal revenue was 0.309 billion yuan, an increase of 9.51% year over year, but due to factors such as low oil sales prices, low production rate, and high upfront project costs, Lander Environmental H1 did not achieve profit.

The company plans to implement fixed increases for investment and construction of outer ring projects

Currently, the company's road production renovation and expansion projects are mainly the Outer Ring Road Phase III and the Locomotive High Speed Project, with investment amounts of 8447 billion yuan and 19.23 billion yuan respectively. 2024H1, construction has begun on several contract segments of the Outer Ring Road Phase III contract. The 2024H2/2025/2026 capital expenditure plans are 2.659/3.956/4.138 billion yuan, respectively. Based on the company's financial situation and investment plan, the company plans to issue no more than 0.654 billion A shares, and raise no more than 4.9 billion yuan (including capital) for Outer Ring Phase III construction and payment of interest-bearing liabilities.

Profit Forecasts and Ratings

Considering the negative impact of the 2024H1 bad weather on the company's traffic and the poor operating performance of the environmental protection business, the company's 2024-2026 revenue is expected to be 9.012/9.936/10.443 billion yuan, respectively, with year-on-year growth rates of -3.05%/10.25%/5.11%; net profit to mother is 2.016/2.26/2.367 billion yuan, respectively, with year-on-year growth rates of -13.36%/12.09%/4.73%; EPS is 0.92, respectively /1.04/1.09 yuan In view of the company's significant production location advantages, the opening of the Shenzhen-China channel is expected to have a drainage effect on the company and maintain the “gain” rating.

Risk warning: Economic growth falls short of expectations; traffic declines due to road network diversion; changes in toll policies.