Shenzhen Expressway earnings gain 16.5pc
Shenzhen Expressway sees this year as a critical year for toll revenue growth after its recent road expansion.
The toll road operator recorded a 16.5 per cent increase in net profit last year to 674 million yuan (HK$739.4 million). Revenue rose 43.4 per cent to 1.1 billion yuan.
A final dividend of 16 fen per share will be distributed.
Shenzhen Expressway chairman Yang Hai said the company was expecting significant growth in traffic volume but, at the same time, raw material costs for road construction were rising.
The company has set aside 7.5 billion yuan for capital expenditure this year. The funds will come from internal resources and bank loans, said financial controller Gong Taotao.
Shenzhen Expressway's debt-to-equity ratio is 50 per cent, up from 29.7 per cent in 2006.
A report from China Everbright Research said that the company's relatively high debt came from financing capital expenditure over the past two years.
Shenzhen Expressway raised 1.5 billion yuan from a bond sale in October last year to fund the 31km Nanguang Highway project. The six-lane expressway opened for traffic in January.
However, Wu Yade, executive director of the company, said: 'The new toll road is recording lower than estimated traffic flow for the first two months due to a lack of promotion.'
The Nanguang Highway posted 11,000 to 13,000 full-trip equivalents in the first two months, which is still below the company's expectation of 28,000 full-trip equivalents.
Another two new projects - the Qinglian Highway linking Hunan and Guangdong provinces, as well as the Yanba Expressway which connects the Shenhui Coastal Expressway with eastern Guangdong - will open for traffic by the end of this year.
Mr Yang said the nearly completed toll roads were not affected by higher raw material prices because the company sealed supply contracts before the recent wave of higher prices. But he said an increase in raw material costs, including cement and steel, would lift the company's overall expenses by 10 per cent this year.
Shenzhen Expressway, which has exclusive rights to develop highways in Shenzhen, has also invested in toll roads in other parts of Guangdong.
The company currently operates 15 toll roads.
Shares of the company closed 7.26 per cent lower yesterday at HK$6 after the company announced its results. The market faced heavy selling yesterday.