Under the travel repair, the highway traffic flow continues to grow, and 23H1's holding road production volume has exceeded the same period of 21 years, and the fundamental repair has a strong certainty. In the long run, relying on regional economic development, the reconstruction and expansion of existing road production provides a guarantee for the growth of the main business, and the company has adhered to a high proportion of dividends for a long time, and the current allocation value is prominent.
Guangdong Highway listing platform, a number of asset restructuring to help the main business operation. The company's main business includes the toll collection and maintenance of Guangfo Expressway, Fokai Expressway, Beijing-Zhuhai Expressway and Guanghui Expressway, as well as shares in Huiyan Expressway, Guangdong Jiangzhong Expressway and other enterprises. as of 2023H1, the mileage of the expressway controlled by the company has reached 306.8 km, and the mileage of the participating expressway is about 295.9 km in proportion to rights and interests, and the three core highways create 98% of the business income for the company. Among them, the contribution income of Guanghui Expressway accounts for 43%, the contribution income of Fokai Expressway accounts for 31%, and the contribution income of Guangzhu Section of Beijing-Zhuhai Expressway accounts for 24%. In 2016 and 2020, the company completed two major asset restructuring, helping the main business to a new level.
Based on the development of regional economy, the reconstruction and expansion of road production brings guarantee for growth. The holding road products of the company are located in Guangdong Province, and a number of expressways are part of the "ten vertical and five horizontal" main framework of the highway network planning of Guangdong Province. The vigorous development of regional economy has led to a strong demand for traffic. The superior geographical location provides a strong guarantee for the growth of the company's road traffic. The company's main business has continued to repair over the past 23 years, and the total number of participating vehicles in the first half of the year reached 260 million, an increase of 3.8% over the same period in 21 years. At the same time, the company continues to seize the opportunity of participating in road production reconstruction and expansion projects. The current projects under construction include the Guangzhou-Zhuhai East Reconstruction and expansion Project, which is expected to increase the company's profits after the completion of reconstruction and expansion. At the same time, it will continue to follow up the progress of the reconstruction and expansion projects of Jiangzhong Expressway and Huiyan Expressway. Carry out the preliminary research work of the reconstruction and expansion project of Yuezhao Expressway and Guanghui Expressway at the same time.
Investment advice. We think the company will benefit from the repair of highway passenger flow in the short term. According to the Ministry of Transport, the number of passenger cars with 9 seats or less on expressways increased by about 27% in the second quarter compared with the same period in 2019.
Long-term benefits from: 1) relying on high-quality highways of the major shareholder Transportation Group, increase opportunities for injection of high-quality assets; 2) networking effect brought about by regional economic growth and continuous encryption of the provincial highway network; 3) long-term traffic flow and traffic income growth brought about by the reconstruction and expansion of core road production. To sum up, we estimate that the return net profit of the company from 2023 to 2025 is 1.64 billion yuan, respectively, corresponding to the 23-year PE of 10.4x and 1.7x. Compared with the historical five-year average, the current valuation still has upward space compared with the historical five-year average, and the dividend ratio is stable, the dividend ratio is attractive, and the "highly recommended" rating is given for the first time.
Risk hints: the regional economic growth is not as expected, the impact of some road property diversion under the road network planning is greater than expected, and the change of toll policy is greater than expected.