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WHAT THE BROKER SAID

About a year ago Core Pacific-Yamaichi advised investors to ''lock in profit'' on Zhejiang Expressway, with the stock trading on a hefty 16.8 times its 2002 forecast earnings and surpassing the broker's target price of HK$3.20.

Zhejiang, one of China's largest toll-road operators, had reported higher than expected traffic growth in January, with all its road projects showing double-digit year-on-year growth. However, the broker believed the strong traffic figures were distorted by an early Lunar New Year. The company planned to acquire road projects at the end of the year.

In August the company said turnover increased for the six months to June 30 by 9.4 per cent to 1.09 billion yuan despite the impact of Sars. Net profit increased 10.3 per cent to 492 million yuan and earnings per share rose 10.3 per cent to 11.3 HK cents. The company said it would invest more than five billion yuan to widen its biggest revenue generator, the Shanghai-Hangzhou-Ningbo Expressway, from four lanes to eight. The expansion of the 248km expressway, to be completed in 2007, would be financed by a 10-year, one billion yuan bond as well as bank loans and the company's capital. The project was expected to return 12 per cent.

The company's two expressways accounted for 94 per cent of revenue - 78 per cent of it contributed by the Shanghai-Hangzhou-Ningbo road. It recorded a 6.41 per cent increase in traffic volume per day to 25,231 and a 4.7 per cent growth in toll income per day to 4.71 million yuan.

The daily traffic volume on Shangsan Expressway increased 24.84 per cent to 13,613 per day, while toll income increased 21.1 per cent to 1.36 million yuan.

The counter closed at HK$5.40 on Friday.

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