Key points of investment
The company announced its 2024 mid-year report: 24H1 revenue of 9.96 billion yuan, a year-on-year increase of 40%, and achieved net profit of 2.748 billion yuan, an increase of 11% over the previous year, of which 24Q2, operating income was 6.487 billion yuan, an increase of 85% over the previous year, and realized net profit to mother of 1.502 billion yuan, an increase of 20% over the previous year. Net profit increased year-on-year due mainly to factors such as the cessation of charging fees to confirm asset disposal income (24H1 non-current asset disposal profit and loss of 54.95 million yuan), and Bank of Jiangsu's advance dividend schedule (2023 was July dividend, 2024 brought forward to June, and received 0.368 billion yuan in dividends during the reporting period).
Main toll road business: It is expected to be driven mainly by truck traffic. 24Q2 tolls fell 24H1 year on year. The total weighted average traffic volume of the road network controlled by the company was 73,323 vehicles per day, up 4.7% year on year, including 60,241 buses per day, up 4.9% year on year, and 13,082 trucks per day, up 3.9% year on year. Among them, bus traffic on the Shanghai-Nanjing Expressway increased 2.8% year on year, and truck traffic decreased 0.8% year on year.
24Q2 toll revenue was 2.25 billion yuan, down 1.7% year on year. It was mainly affected by a sharp drop in traffic due to the renovation and expansion of the Xiyi Expressway (expected to be completed and opened to traffic by the end of June 2026), as well as a 5% year-on-year drop in toll revenue from the Shanghai-Nanjing Expressway. Furthermore, the gross margin of the 24H1 toll road business declined by 3.8 pct to 60.7% year on year, mainly due to centralized maintenance on sections such as the Shanghai-Nanjing Expressway, a corresponding increase in road maintenance costs, and an increase in levy costs.
Supporting business
The revenue of 24H1 from the ancillary business was 0.85 billion yuan, a year-on-year decrease of 6%. Among them, due to the decline in oil sales volume, oil sales revenue was 0.76 billion yuan, down 9% year on year; service area leasing business revenue was 0.07 billion yuan, up 27.9% year on year, mainly due to the completion of a new round of investment promotion work after the termination of the original leasing contract.
New energy business
Benefiting from weather and other factors, the feed-in electricity volume of Spruce Qingneng's offshore wind power projects and photovoltaic projects increased by 5.6% year on year, but after electricity sales revenue was deducted from relevant operating assessments and auxiliary service fees according to relevant regulations, the group achieved electricity sales revenue of about 0.35 billion yuan, a decrease of 0.95% year on year.
Real estate and other business
Real estate: 24H1's revenue was about 0.13 billion yuan, a year-on-year decrease of 49%, mainly due to the smaller delivery scale of real estate projects than in the same period last year. Advertising management and management services: 24H1 achieved revenue of 0.09 billion yuan, a year-on-year decrease of 18.7%, mainly due to the fact that although the subsidiary's hotel business was better than the same period last year, achieving service revenue of 0.02 billion yuan, an increase of 26.4% over the previous year, the factoring business revenue decreased accordingly after the transfer of factoring company shares in 2023.
Investment advice
We estimate that the company's net profit for 2024-2026 will be 4.6, 5.2, and 5.4 billion yuan, respectively. The company has outstanding location advantages and stable high dividend characteristics. The DPS was raised to 0.47 yuan in '23, the absolute profit value is prominent, and the “gain” rating is maintained.
Risk warning
Traffic growth falls short of expectations, highway construction investment falls short of expectations; impact of road rate policies, etc.