Summary of the research report:

Conclusions and investment recommendations

Policy short-term labor pains long-term positive, risk controllable; the industry as a whole to maintain steady growth, it is recommended to layout dividend defense and steady growth two lines.

Cause and logic

Policy: abolish provincial toll stations, promote the application of non-stop electronic toll collection system and charge trucks by type of car, short-term pain and long-term pain. In May, the State Council issued the "implementation Plan for deepening the Reform of the Toll Road system and abolishing Provincial Boundary Toll stations", mainly promoting the cancellation of provincial boundary toll stations, in order to cooperate with the cancellation of provincial boundary toll stations, at the same time, it is required to vigorously promote the application service of non-stop electronic toll system and change the truck toll mode. In the short term, the promotion of the non-parking electronic toll collection system with a 5% discount will affect the toll revenue, and the impact on the sector profit is expected to be 4% Mur5%. However, this impact is an one-time impact, the relative risk can be controlled, and in the long run, it will reduce labor costs and improve traffic efficiency, and promote the development of the industry in the long run.

Industry: steady growth of traffic flow and improvement of high-speed investment. High-speed traffic is based on the increase in vehicle ownership and travel frequency, of which passenger cars account for 78%, with low economic sensitivity. In the first half of the year, driven by the growth of vehicle ownership and the increase in travel frequency, the national high-speed traffic flow was 5.248 billion, a steady increase of 7.44% over the same period last year. In addition, from the perspective of construction investment, the consultation manuscripts of the new "Highway Law" and the "Toll regulations" clearly control the scale of toll roads, the construction of new roads is prohibited in areas with lower toll income, and the average income per kilometer of highways has increased year by year in recent years. The national highway income and expenditure balance narrowed year by year, and the quality of investment return gradually improved.

Cause and logic

Dividend Defense: suggested layoutGuangdong Expressway AAndNanjing-Shanghai Expressway. The high-speed enterprises in the eastern coastal provinces have good cash flow and high dividend ability, which has the value of defensive allocation from the perspective of dividends. Among them, we expect the cash dividend ratio of Guangdong Expressway to be 70% from 2019 to 2020. according to our previous forecast, the net profit of 2019 will be 1.566 billion yuan, corresponding to the closing price of 7.2% on August 13, which has the characteristic of high short-term dividend. The dividend policy of Nanjing-Shanghai Expressway is based on the dividend per share, and the amount of dividend is not lower than that of the previous year. From 2014 to 2018, the company's dividend per share is 0.38,0.40,0.42,0.44,0.46 yuan respectively. It is linearly speculated that the dividend per share in 2019 is expected to reach 0.48 yuan. Corresponding to the closing price on August 13, the dividend yield is 4.7%, with long-term dividend robustness.

Steady growth: recommended attentionInvestment promotion highwayAndShandong highway. China Merchants Highway, as the leader of market capitalization, relies on the layout of road products by China Merchants Bureau, and has a steady growth outside the dividend framework. based on the industry-leading growth rate of road investment profits, the net profit of home ownership in 2018 and the first quarter of 2019 increased by 16.1% and 16.9% respectively compared with the same period last year, while the current 19PE is only 11 times. On the one hand, Shandong Expressway returns to the main road industry in the direction of foreign investment, which is expected to improve the rate of return on investment. On the other hand, after the completion of the reconstruction and expansion of Jiqing Expressway, the consolidation pressure drop in 2020 will be digested by income, and then profits are expected to increase significantly.

Different from the public's understanding

The market believes that the promotion of non-stop electronic toll collection system this year has a negative impact on the profits of the high-speed plate, which is not conducive to the layout of the plate.

We believe that there is no need to be pessimistic about plate investment. first of all, the risk of this impact is controllable, the negative impact is relatively small, and the negative impact is highly controllable in expectations; secondly, the impact should mainly be reflected next year, or there are certain remedial measures such as cost control; in addition, from a long-term point of view, labor costs are bound to be reduced, which will eventually be good for the development of the industry.

The market believes that: the elasticity of the high-speed plate is small and only defensive, so it is not suitable for the investment in the upward period of the market.

We believe that the high-speed plate as a whole is relatively robust, but the plate is broken down or only looks at the target, and it is both offensive and defensive in investment. The eastern coastal highway has the characteristics of high dividend, although it has the characteristics of defensive allocation. However, the national layout of the high-speed leading investment highway has steady growth, and the Shandong highway, which is full of profit, has room for valuation and repair, and has the value of growing offensive layout. Therefore, the whole industry still has the characteristics of both offensive and defensive.

Risk hint: the discount of high-speed toll is further increased; the negative impact of the change of truck charging mode.