Shenzhen Expressway Announces 2018 First Quarterly Results

Net Profit Amounts to RMB399 million, Representing a YOY Growth of 38.5%

(Hong Kong, 25 April 2018) Shenzhen Expressway Company Limited (Stock Code: 600548. SH, 00548. HK) (hereinafter referred to as “Shenzhen Expressway” or the “Group”) published the unaudited operating results for the first quarter of 2018 (the “Reporting Period”). The report indicates that the Group recorded revenue of approximately RMB1.342 billion, representing a YOY growth of 19.9%.; net profit of approximately RMB399 million; earnings per share of RMB0.183, representing a YOY increase of 21.5%.

In the first quarter of 2018, the Group recorded a YOY increase in revenue of 19.9%, mainly attributable to the increase in toll revenue and revenue from property development. Among which, toll revenue amounted to RMB1.212 billion, representing a YOY increase of 17.6%. Toll revenue contributed by new projects including Yichang Expressway, Costal Expressway and Changsha Ring Road amounted to RMB240 million, accounting for approximately 20% of toll revenue. Toll revenue from the existing ancillary toll highway projects recorded a YOY growth of 3.3%.

During the Reporting Period, due to changes in consolidation, the Group recorded a YOY increase in cost of services of 17.18% and overall cost of services of other existing ancillary toll highways of the Group grew by 1.52%, mainly attributable to the increase in depreciation and amortization. Exchange gains increased year on year since USD debentures appreciated along with RMB. Financial expenses decreased by 15.02% year on year.

During the Reporting Period, debt-to-asset ratio of the Group was 63.6%. Excluding compensations related to the toll adjustment of Three Expressways and balance of construction capital for Outer Ring and Costal Phase II project from the government, debt-to-asset ratio was approximately 52%.

During the Reporting Period, the Group completed acquisition of 100% equity interest in Coastal Company. Coastal Company was consolidated into the Group as an entity under common control during the Reporting Period, and contributed toll revenue of approximately RMB103 million during the Reporting Period. This has further consolidated the scale of road assets and revenue of the Group in Shenzhen. Moreover, Shenzhen Expressway and Shenzhen Transportation Bureau has signed the “Freight Compensation Agreement for Guangshen Coastal Expressway Shenzhen Section”. Pursuant to this agreement, Coastal Company will charge a concessionary 50% of the normal rate for trucks travelling along the Coastal Expressway Shenzhen section from 1st March 2018 until 31st December 2020, Shenzhen Transportation Bureau will provide cash compensation amount of RMB 300 million to the Coastal Company.

On 8 March 2018, the Company entered into a cooperation agreement with China Development Bank for the development of finance. The total financing amount on each type of financial products intended by both parties amounted to RMB20 billion, which will provide capital support and assurance for the Company’s further expansion in toll road business and environmental protection business in the future. In addition, The China Securities Regulatory Commission has accepted the company’s administrative application for issuance of convertible bonds for A shares on 13 April, 2018. 

Looking into the future development of the Group, the management indicated that Shenzhen Expressway has accumulated profound experience in construction, maintenance, operation and management of highway and road as well as investment in related infrastructure, enabling itself to develop core competitive advantages. Moreover, that it entered into the environmental protection industry at a high starting point has laid a solid foundation for Shenzhen Expressway to achieve smooth and high development in the future. For the years to come, as the government will step up the efforts in advancing the strategies in relation to reform in state-owned enterprises, regional economization and urbanization progress, expand the cooperation of “Belt and Road” and gradually implement the Shenzhen-Shanwei Special Cooperation Zone Plan, which will provide the Group with favorable opportunities to develop its transportation infrastructure business and environmental protection business, the future development of Shenzhen Expressway will be taken to a new level of success. The Group will continue to consolidate and upgrade the main business of toll highway while at the same time integrating resources to fully leverage the innovative capability in business model of the financing field. Relying on its capability in integrating and consolidating resources, the Group will proactively press ahead and implement new industrial investments in order to create more values for the long-term and healthy development of the enterprise.