Shenzhen Expressway posts 22pc profit gain

PUBLISHED : Saturday, 26 August, 2006, 12:00am
UPDATED : Saturday, 26 August, 2006, 12:00am

Shenzhen Expressway, a toll-road operator in southern China, said first-half profit rose 22 per cent, helped by higher traffic flow after it extended a highway and bought another one.

Profit for the first six months rose to 267 million yuan from 218 million yuan a year ago while turnover jumped 33.6 per cent to 553 million yuan.

Earnings were bolstered by the opening of the extension of Shuiguan expressway in July last year and the purchase of a stake in Wuhuang expressway one month later.

'The company's existing portfolio of toll roads is performing strongly and long-term earnings growth from new development projects remains on track,' said a report released last week by Macquarie, which expected a 21 per cent increase in the firm's profit.

Future income would be further enhanced by more highway projects that were due to be completed over the next few years, including the Nanguang Expressway linking Shekou port to Nansha district, analysts said.

China is gradually imposing new toll charges on its highways based on weight of the vehicles instead of the distance they travel, a move that analysts said would boost income of toll-road operators.

Guangdong is expected to adopt the new system on its highway which should help Shenzhen Expressway's income because it runs nine roads in the province and another nine in Shenzhen.

Shenzhen Expressway's profit growth was slower than that of Jiangsu Expressway and Anhui Expressway, which posted more than 60 per cent increase in earnings.

Sichuan Expressway saw profit growth of 6.6 per cent.

Investors are upbeat about toll-road firms in the second half and expect them to keep double-digit growth in earnings.

Shenzhen Expressway plans nine billion yuan of capital expenditure over the next five years to invest in new highways and infrastructure projects.