occurrences

Recently, Fujian Expressway disclosed its 2024 semi-annual report. During the reporting period, we achieved total operating income of 1.477 billion yuan, an increase of +0.79% year on year; net profit to mother of 0.531 billion, an increase of 0% from last year; net profit to mother after deduction of 0.526 billion yuan, an increase of +0.32% year on year. During the reporting period, basic earnings per share were 0.19 yuan, and the weighted average return on net assets was 4.66%.

reviews

The company's main business is highway investment, construction, toll collection and operation management. The company's business model is to obtain operating income by investing in the construction of highways and collecting vehicle tolls. The company's operating income mainly comes from highway tolls collected by the company from vehicles. The main business revenue is highway toll distribution revenue. Other business revenue includes highway advertising revenue, ETC Mintong card revenue, traffic removal business revenue, operation and development revenue, etc. The main business revenue accounts for a relatively high share of the company's revenue. The company's main business did not change during the reporting period. The road sections operated and managed by the company are the Quanxia Expressway (82 km toll mileage), Fuquan Expressway (167 km toll mileage), and the Luoning Expressway (33 km), with a total operating mileage of 282 km. The company participated in the Punan Expressway (245 km toll mileage).

In the first half of the year, the company's overall performance remained stable, and toll revenue was basically the same year on year; during the reporting period, the company did not add new highway traffic mileage. The Fuquan Expressway and Quanxia Expressway have implemented an expansion project to “widen four lanes in both directions to eight lanes in both directions”. All other sections of the road are 4 lanes in both directions. Among them, the Quanxia section achieved distributed revenue of 0.598 billion yuan, a year-on-year decrease of 1.33%; the Fuquan section achieved distributed revenue of 0.796 billion yuan, a year-on-year increase of 2.6%; and the Ronin section achieved distributed revenue of 0.069 billion yuan, an increase of 7.72% over the previous year.

Investment ratings

In the first half of 2024, Fujian's economy was generally running smoothly, with significant growth in foreign trade exports, etc., the value added of the province's service industry increased 4.8% year on year, people's willingness to travel continued to rise, and tourist reception in the province reached a record high, creating the prerequisites for the company's revenue growth in the current period. We give it an “gain” rating.

Risk warning

The economic downturn has led to a decline in traffic; the impact of weather on highways; the risk of road network diversion;