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<Research Report>HSBC Global Research Slightly Cuts YUEXIUTRANSPORT (01052.HK) TP to $5; Asset Injection May be Next Catalyst
HSBC Global Research highlighted in a report that YUEXIUTRANSPORT (01052.HK)'s revenue rose 21% YoY to RMB3.967 billion last year, while net profit after tax rose 69% to RMB765...
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<Research Report>HSBC Global Research Slightly Cuts YUEXIUTRANSPORT (01052.HK) TP to $5; Asset Injection May be Next Catalyst
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HSBC Global Research highlighted in a report that YUEXIUTRANSPORT (01052.HK)  +0.010 (+0.270%)    Short selling $1.36M; Ratio 16.498%   's revenue rose 21% YoY to RMB3.967 billion last year, while net profit after tax rose 69% to RMB765 million. The broker believed the lower-than-expected profit was due to a RMB100 million impairment loss on an associate. The company's dividend payout ratio was 60% last year and it will maintain a stable dividend payout ratio of 50-60% in the long run.

The broker said the group's Guangzhou Northern Second Ring (GNSR) Expressway will contribute about 29% of its toll revenue in FY23, and its widening project will commence in June this year, with at least four to six lanes continuing to be operated during the construction period. Management believed that the negative impact of the GNSR widening and road diversion should be limited and expected that the road toll revenue would be roughly flat YoY in FY24.

In addition, the group's parent has acquired two mature motorway assets over the past 3 years and may act as an asset injection into the group throughout this and next year. The company is also considering further asset injections into the C-REIT platform to recognise future revenues from target assets in advance, which will help the company reduce its gearing ratio.

HSBC lowered its earnings estimates for YUEXIUTRANSPORT by 18% and 13% for this year and next year respectively to reflect higher-than-expected operating and depreciation expenses. The broker also trimmed its target price from $5.1 to $5 and maintained its Buy rating.

HSBC's dividend payout ratio forecast for the group has been raised from 54% to 55%, and believed that the company's road revenue would grow steadily with the resumption of traffic flow and the potential asset injection by the parent company, which would become the next catalyst.

(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-12-20 16:25.)

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