深高速研究报告：国泰君安国际-深高速-0548.HK-梅观高速有13.8公里转为免收费,获补偿27亿元,利好-140129

G TJ A R es ea rc h 国泰君安研究 S he nz he n E xp re ss w ay 深高速 (0 05 48 H K ) C om pa ny R ep or t See the last page for disclaimer of 5 Company Report: Shenzhen Expressway (00548 HK) Gary Wong黃家瑋 公司报告：深高速(00548 HK) +85225092616 gary.wong@gtjas.com.hk 29 January 2014 13.8 km of Meiguan Expressway Turned Free, Received Compensation of RMB2.7 billion, Positive 梅观高速有13.8公里转为免收费,获补偿27亿元,利好 Shenzhen Expressway (00548 HK) reached an agreement with the Shenzhen Government to allow Meilin to Guanlan section of Meiguan Expressway to become free starting 1 April 2014, for a total compensation of RMB2.7 billion. According to the terms, RMB800 million shall be payable before 30 April 2014, RMB800 million will be payable before 31 August 2015, and the remaining balance plus accrued interest will be payable before 31 December 2016. The compensation is RMB500 million higher than our expectation. We expect core net profit to decrease by 8.7% and 6.9% respectively for FY14 and FY15, while net gearing should substantially decrease by 12 ppts and 8.6 ppts respectively for FY14 and FY15 compared with original estimates before the deal. The deal removed long term uncertainty for the Company and much strengthened the Company’s balance sheet and ability to increase dividends. We think the deal is positive overall. Lower core EPS estimates of FY14-15 by 9.8% and 6.5%, respectively, to RMB0.340 and RMB0.402. Current valuation is at 7.7x/7.9x/6.5x FY13/14/15 PER (based on core profit), and is at 30% discount to peers. Raise the TP to HKD4.32, representing 9.5x/9.8x/8.0x FY13/14/15 PER (based on core profit) and 0.8x FY14 NAV. Maintain “Buy”. 深高速(00548 HK)与深圳市政府一致同意将梅观高速默林至观澜段转为免费路段,从2014 年4月1日起生效。

深圳市政府将向公司补偿27亿元。

根据协议,2014年4月30日前将 支付8亿元,2015年8月31日前将支付8亿元,剩余的款项加应计利息将于2016年12月 31日前支付。

我们认为补偿额高于预期5亿元。

我们预计14及15年核心盈利将会较交易前的预计数字 跌8.7%及6.9%,而净债务比率则会较交易前的预计数字减低12个百份点及8.6个百份点。

该交易清除了长远的不确定因素,并大大提高公司的财政状况及派息能力。

我们认为交易影 响整体正面。

调低14-15年每股核心盈利预测9.8%及6.5%至0.340元及0.402元。

公司现时估值为7.7 倍/7.9倍/6.5倍的预期市盈率(以核心盈利计),较同业折让30%。

调高其目标价至4.32港元, 相当于9.5倍/9.8倍/8.0倍的13/14/15年预期市盈率(以核心盈利计),及0.8倍的14年每 股估值。

维持“买入”评级。

Rating: Buy Maintained 评级：买入(维持) 6-18m TP目标价: HK$4.32 Revised from原目标价: HK$4.06 Share price股价：HK$3.500 Stock performance 股价表现 Change in Share Price 股价变动 1 M 1个月 3 M 3个月 1 Y 1年 Abs.% 绝对变动% 1.1610.069.03 Rel.% to HS index 相对恒指变动% 6.6713.7716.26 Avg. share price(HK$) 平均股价（港元） 3.433.473.11 Source: Bloomberg, Guotai Junan International Year End 年结 Turnover 收入 Net Profit 股东净利 EPS 每股净利 EPS 每股净利变动 PER 市盈率 BPS 每股净资产 PBR 市净率 DPS 每股股息 Yield 股息率 ROE 净资产收益率 12/31 (RMB m) (RMB m) (RMB) (△%) (x) (RMB) (x) (RMB) (%) (%) 2011A 2,9528750.40117.36.94.2210.70.1605.79.8 2012A 3,1356850.314 (21.8) 8.74.3730.60.1304.87.3 2013F 3,3137470.3439.27.74.5860.60.1304.97.7 2014F 3,3512,3431.075213.52.45.5300.50.1505.721.2 2015F 3,6078760.402 (62.6) 6.55.7820.50.1606.17.1 Shares in issue (m)总股数(m) 2,180.8 Major shareholder大股东(%) SZInternational 50.1 Market cap. (HK$ m)市值(HK$ m) 9,181.5 Free float (%)自由流通比率(%) 44.3 3 month average vol.3个月平均成交股数(‘000) 2,678.8 FY14 Net gearing (%) FY14净负债/股东资金(%) 57.2 52 Weeks high/low (HK$) 52周高/低3.660 / 2.520 FY14 Est. NAV (HK$) FY14每股估值（港元） 5.40 Source︰the Company, Guotai Junan International (25.0) (20.0) (15.0) (10.0) (5.0) 0.0 5.0 10.0 15.0 20.0 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 % of return HSIIndex SHENZHENEXPRESSWAYCO-H 29 Ja nu ar y 20 14 S he nz he n E xp re ss w ay 深高速 (0 05 48 H K ) C om pa ny R ep or t See the last page for disclaimer of 5 Meilin to Guanlan section of Meiguan Expressway becomes free starting 1 April 2014. The Company reached an agreement with Shenzhen Government Authorities (SGA), with the Company agreeing to implement toll-free for the Toll Free Section, i.e. Meilin to Guanlan section of Meiguan Expressway with a mileage of approximately 13.8 km from 1 April 2014, and SGA agreed to make cash compensation to the Company, which includes compensation of the future income of the Toll Free Section for approximately RMB1,598 million, and other relevant costs for approximately RMB1,102 million, totaling 2,700 million. Note that the toll of Shenzhen-Donguan border to Guanlan section of Meiguan Expressway with a mileage of 5.4 km should remain unchanged. According to the payment terms,1) RMB800 million shall be paid before 30 April 2014,2) RMB800 million shall be paid before 31 August 2015, and 3) the balance of compensation plus the interests shall be paid before 31 December 2016. Interest shall start to accrue from 1 April 2014 according to the loan prime rate with the same term announced by the PBOC. Fig 1: Meiguan Expressway Source: the Company. Our views: Compensation is higher than expected and long-term uncertainty is removed. According to the BOT terms, the concession rights of the Free Toll Section should originally expire in 2027, i.e. should have 13 years more for operation if not being bought by Shenzhen Government. We estimate that this section generate approximately RMB125 million free cash flow in 2014. Assuming that this free cash flow increases by 15% annually in the next three years and 7% in the next 9 years (aggressive growth numbers), and a discount rate of 8.5% (industry norm), NPV of future income for this section should be RMB1,584 million, which is very close to the estimate provided by the announcement. However, Shenzhen Government also provides compensation for other expenses such as staff relocation and tax payments, which is RMB1,102 million, even after a tax deduction of approximately RMB600 million, total compensation is still RMB500 million higher. We think the compensation is generous. In addition, we think long-term uncertainty of operation of Meiguan Expressway is being removed with this agreement, especially when competition from metro is becoming more keen. 29 Ja nu ar y 20 14 S he nz he n E xp re ss w ay 深高速 (0 05 48 H K ) C om pa ny R ep or t See the last page for disclaimer of 5 P&L effects: We expect the core net profit of FY14 and FY15 to decline by 8.7% and 6.9%, respectively, compared with original estimates due to the deal. On the negative side, termination of toll collection for the 13.8 km section reduced net profit by approximately RMB95 million annually. On positive side, increase in traffic for the remaining 5.4 km section might increase net profit by approximately RMB5 million annually. We think the net effect is a reduction of RMB90 million in net profit. In addition, assuming that 80% of the compensation of RMB1,600 million is used to repay debts (RMB800 million before 1 April and RMB800 million before 31 August 2015), and a borrowing rate of 5%, we expect interest expenses should decrease by RMB18 million and RMB24 million respectively in FY14 and FY15 compared with before. Hence, we expect the net effects of the deal to P&L should be a decline of 8.7% and 6.9% in core net profit compared with the estimates originally. B/S effects: We expect net gearing to decrease by 12 ppts and 8.6 ppts, respectively, in FY14 and FY15 compared with original estimates. We think the deal’s benefits for B/S very clear: debt repayments. Assuming 80% of the compensation is used to repay debts, net gearing should decrease by 12 ppts and 8.6 ppts respectively in FY14 and FY15. In addition, as the Company’s share is being traded below NBV now, selling off assets at above NBV releases the intrinsic value of the Company. TP is raised to HKD4.32, maintain “Buy”. We lower the core EPS (which excluded the gain of disposal) estimates of FY14-15 by 9.8% and 6.5% respectively to RMB0.340 and RMB0.0.402. We think the disposal do more good than harm as net profit decline is not significant while balance sheet becomes much stronger. In addition, we think the Company might increase dividend payout with an much improved balance sheet and capital expenditure peak passed. The Company’s current valuation is at 7.7x/7.9x/6.5x FY13/14/15 PER (based on core profit), which is at 30% discount to the peers. We raise the TP to HKD4.32, representing 9.5x/9.8x/8.0x FY13/14/15 PER (based on core profit) and 0.8x FY14 NAV. Maintain “Buy”. Company Stock Code Currency Last Price PEPBROED/Y 12A 13F 14F 15F 12A 13F 14F 15F 13F 13F Anhui Expressway Co Ltd-H 995 HKHKD 4.027.26.56.45.90.80.70.70.611.36.6 Shenzhen Expressway Co-H 548 HKHKD 3.509.18.16.76.50.60.60.60.57.35.4 Jiangsu Express Co Ltd-H 177 HKHKD 9.4416.614.113.012.22.01.91.81.813.75.2 Yuexiu Transport Infrastruct 1052 HKHKD 3.8612.38.57.26.80.60.60.60.67.27.9 Hopewell Highway Infrastruct 737 HKHKD 3.5610.313.914.013.41.21.21.21.28.47.2 Zhejiang Expressway Co-H 576 HKHKD 6.8314.312.712.211.71.51.41.31.311.05.8 Sichuan Expressway Co-H 107 HKHKD 2.114.45.04.94.70.50.50.40.49.33.9 Simple Average 10.69.89.28.71.11.00.90.99.76.0 Weighted Average 12.811.610.910.31.41.31.31.211.05.7 Source: Bloomberg 29 Ja nu ar y 20 14 S he nz he n E xp re ss w ay 深高速 (0 05 48 H K ) C om pa ny R ep or t See the last page for disclaimer of 5 Financial Statements and Ratios Income Statement Balance Sheet Year end Dec (RMB m) 2011A 2012A 2013F 2014F 2015FYear end Dec (RMB m) 2011A 2012A 2013F 2014F 2015F Total Revenue 2,9523,1353,3133,3513,607 PP&E 1,2151,0981,1491,1181,078 Toll revenue 2,7162,7272,8432,8273,030 Construction in progress 281618129 Construction Mgmt Services 149294353396435 Concession intangible assets 18,91018,58218,07316,54815,996 Others 87114117129142 Investment in JVs and associates 1,5861,6241,7331,7981,889 Business Tax (105) (113) (115) (117) (126) Other non-current assets 1631841851,484684 Net Revenue 2,8473,0233,1983,2353,482 Total non-current assets 21,90221,50421,15820,96019,656 Cost of services (1,183) (1,510) (1,694) (1,797) (1,960) Gross Profit 1,6651,5121,5041,4381,521 Cash & cash equivalents 2,1681,9552,0712,4002,858 Trade and other receivables 316386408412444 Other Incomes and expenses - (net) 1 (2) 21,6011 Other current assets 223365626768 Administrative Expenses (88) (80) (90) (99) (108) Total current assets 2,7072,7052,5412,8793,369 Operating Profit 1,5771,4311,4172,9401,414 Total assets 24,60924,20923,69923,83923,025 Finance Income 1635384246 Finance Costs (564) (657) (615) (579) (499) Long term borrowings 10,2548,2999,3758,1856,812 Net Finance costs (548) (622) (577) (538) (453) Deferred income and tax liabilities 938935935935935 Net Income from JVs and Associates 128129190217249 Maintenance provision 356196356356357 PBT 1,1589361,0302,6201,211 Total non-current Liabilities 11,5609,44710,6829,4928,121 Income tax expenses (237) (210) (219) (204) (251) Net profit 9207278112,416959 Short term borrowings 6252,264594525510 Minority interests 4442637283 Trade and other payables 1,4031,2831,021753713 Net profit attributable to equity holders 8756857472,343876 Other current liabilities 523343357348363 Total current liabilities 2,5513,8901,9721,6271,585 EPS(RMB) 0.4010.3140.3431.0750.402 Total liabilities 14,11113,33612,65411,1199,706 Core EPS (RMB) 0.4010.3140.3430.3400.402 DPS(RMB) 0.1600.1300.1300.1500.160 Share capital 2,1812,1812,1812,1812,181 Cash Flow Statement Reserves 7,0247,3557,8198,3588,989 Year end Dec (RMB m) 2011A 2012A 2013F 2014F 2015FShareholders' equity 9,2049,53610,00012,06012,609 Net Profit 9207278112,416959 Minority interest 1,2931,3361,045660710 Depreciation and amortization 711813873896983 Total equity 10,49810,87211,04512,72013,319 Change in working capital (237) (449) (287) (276) (72) Total equity and liabilities 24,60924,20823,69923,83923,025 Other operating activities 114440402 (1,266) 215 Net cash from operating 1,5081,5311,7991,7702,086 BVPS (RMB) 4.2214.3734.5865.5305.782 Capital expenditure (873) (545) (420) (372) (395) Others 1321171701,059960 Net cash used in investment (741) (428) (250) 687564 Net proceeds of borrowings 2,6331,272 (1,203) (1,277) (1,103) Financial Ratios Dividends paid to equity holders (244) (264) (284) (284) (327) 2011A 2012A 2013F 2014F 2015F Others (1,561) (2,324) 54 (567) (763) Net cash generated from financing 828 (1,316) (1,433) (2,128) (2,192) Gross margin (%) 56.448.245.442.942.2 Operating margin (%) 53.445.642.887.739.2 Net increase/(decrease) in cash 1,596 (213) 116329458 Net margin (%) 29.621.822.669.924.3 Cash equivalents at beginning of the year 5772,1681,9552,0712,400 ROA (%) 3.72.83.19.93.7 Forex adjustment (5) (0) 000 ROE (%) 9.87.37.721.27.1 Cash equivalents at end of the year 2,1681,9552,0712,4002,858 Net gearing ratio (%) 97.591.980.857.236.2 Source: the Company, Guotai Junan International 29 Ja nu ar y 20 14 S he nz he n E xp re ss w ay 深高速 (0 05 48 H K ) C om pa ny R ep or t See the last page for disclaimer of 5 Company Rating Definition The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Buy Relative Performance >15%; or the fundamental outlook of the company or sector is favorable. Accumulate Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral. Reduce Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable. Sell Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable. Sector Rating Definition The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform Relative Performance >5%; or the fundamental outlook of the sector is favorable. Neutral Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform Relative Performance <-5%; or the fundamental outlook of the sector is unfavorable. DISCLOSUREOFINTERESTS (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for Shandong Chenming Paper Holdings Limited-H shares (01812) and China City Railway Transportation Technology Holdings Company Limited (01522), Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). 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