Transcript Factsheet 2015 Interim

Zhejiang Expressway Co., Ltd.
(HKEx: 576; LSE: ZHEH;
ADR: ZHEXY)
5/F., No. 2, Mingzhu Int’l Business Center
199 Wuxing Road
Hangzhou City
Zhejiang Province, PRC, 310007
Website: www.zjec.com.cn
Investor Relations Contact
Zhejiang Expressway Co., Ltd.
Mr. Tony Zheng
(86) 571 8798 7700
[email protected]
Ms. Helen Wu
(86) 571 8790 1966
[email protected]
Christensen Investor Relations
Ms. Jung Chang
(852) 2117 0861
[email protected]
Mr. Ricky Tan
(852) 2232 3941
[email protected]
Financial Highlights
Fiscal Year End
Dec 31
__________________________________
Current Price
(September 7, 2015)
HK$8.11
__________________________________
52-Week Range
HK$7.50-HK$13.38
__________________________________
P/E (ttm)
10.37(X)
__________________________________
Market Cap
HK$35.35B
__________________________________
1H 2015 Revenue
RMB 5,959M
__________________________________
1H 2015 Profit
attributable
to owners of the
Company
RMB 1,514M
__________________________________
1H 2015 EPS
RMB 34.87cents
__________________________________
1H 2015 ROE
8.7%
__________________________________
Corporate Profile
Established in 1997, Zhejiang Expressway Co., Ltd. is regarded by
the Zhejiang Provincial Government to be its main enterprise for
investment in and development, operation, maintenance and
management of high-grade roads in Zhejiang Province. The
Company and its subsidiaries (the “Group”) has concession rights
to operate the 248km Shanghai-Hangzhou-Ningbo Expressway
and the 142km Shangsan Expressway for a period of 30 years,
and also the 70km Ningbo-Jinhua Expressway (Jinhua section)
for a period of 25 years. The Group also carries out certain
ancillary businesses such as restaurants, shops, and gas stations
within service areas, billboard advertising at expressway
interchanges, external road maintenance, as well as securities
businesses across the country.
The H Shares of the Company were listed on the Hong Kong
Stock Exchange on May 15, 1997, and the Company
subsequently obtained a secondary listing on the London Stock
Exchange on May 5, 2000. On February 14, 2002, a Level I
American Depositary Receipt program sponsored by the
Company in respect of its H Shares was established in the United
States.
Market Review
In the first half of 2015, China’s economy was stable. The
national GDP exceeded expectations and grew by 7.0% year-onyear. Zhejiang’s economy steadily improved and its GDP
increased by 8.3% year-on-year due to the initial success of its
economic transformation and upgrade.
Furthermore, the trading volume in securities markets in China
increased 545.8% year-on-year during the Period.
* Bureau of Statistics of Zhejiang Province
GDP Growth Rate - PRC vs Zhejiang
Province
(%)
14
12
10
11.8
9.2
9.2 9
8
7.8 8
7.7
6.4
7.4 7.6
8.3
7.0
6
4
2
0
2010
2011
2012
China
2013
Zhejiang
2014
1H 2015
PRC government and Zhejiang Province Management Team
continue to invest heavily in toll road and
Mr. Xiaozhang Zhan
infrastructure
Chairman
According to figures released by the Ministry of
Communications, investment in highway fixed assets
amounted to RMB 803.6 billion as of July 2015, up
109.0% yoy.
Zhejiang Province invested RMB 41.4 billion in highway
fixed assets as of July 2015, up 111.9% yoy.
Total Mileage of Expressways in
Zhejiang Province
km



Executive Director & General Manager

3,618

2020
2018
2016
2014
2012
2010
2008
2005
2003
2001
1999
1997

1995
Re-appointed Chairman on July 1, 2015
Appointed Executive Director and General Manager on
Mar 1, 2009
Senior economist; master’s degree from the Business
Institute of Zhejiang University
Has extensive experience working in Zhejiang Provincial
Government
Ms. Jianhu Luo
5,000
5,000
4,000
3,000
2,000
1,000
0

Operating environment – steady growth in toll
income boosted by improving economy
Re-appointed Executive Director and General Manager
on July 1, 2015
Graduated from the Department of Law of Hangzhou
University, majored in Economic Law; a senior economist
with a bachelor’s degree in law
Held positions such as board secretary of Zhejiang
Transportation Engineering Construction Group Co.,
Ltd., Secretary and Assistant to Director of the
Secretarial Office to the Board, Deputy Director of the
Legal Affairs Department, deputy director of the
Secretarial Office to the board and the manager of the
Investment and Development Department of Zhejiang
Communications Investment Group Co., Ltd.
In 1H 2015, traffic volume on the Group’s expressways
continued to maintain organic growth thanks to steadily
improved economy in Zhejiang. As a result, total toll Mr. Jingzhong Zhang
income increased by 5.7% year-on-year to RMB2,230.83 Deputy General Manager
million. Toll income from the Group’s major highway, the  Joined Zhejiang Provincial Political Science and Law
Shanghai-Hangzhou-Ningbo Expressway, increased by Policy Research Unit in 1984
3.7% year-on-year. Toll income from Shangsan and  Served as Associate Director of Hangzhou Municipal
Ningbo-Jinhua Expressways, recorded 9.0% and 14.3% Foreign Economic Law Firm from 1988 to 1994. In 1992,
he obtained the qualifications required by the regulatory
growth, respectively.
authorities in China to practice securities law

Certain policies such as toll exemption for small Has been an Executive Director and Company Secretary
passenger vehicles during major festivals and holidays of the Company since March 1997, and was appointed
Deputy General Manager in March 2002. Currently also
continued to have adverse effects on the toll income.
serves as Director at Shangsan Co., Development Co.,
and Vice Chairman at Zheshang Securities
The Group will focus on enhancing its core toll road
business by prudently investing in and acquiring highMr. Dehua Wang
quality road assets.
Securities business – robust growth in Chief Financial Officer
 Appointed Chief Financial Officer in March 2014.
brokerage commission income
In 1H 2015, intensified competition and gradual
relaxation of controls on commissions in the brokerage
sector led to decrease of commission rates, which was
offset by substantial increase in trading volume. The
Group’s total operating income increased 227.3%, while
brokerage commission income increased 232.3%.
Zheshang Securities continued to actively develop
innovating business, and work to improve and balance
its income and profit structure. Its application for an
initial public offering was approved in May 2013, and it
remains on the waiting list for an IPO.


Graduated from University of Hong Kong in 2007; holder
of master’s degree in Economics
Has been a Deputy General Manager of Zhejiang
Communications Investment Group Co., Ltd. from 2011
to 2014
Mr. Tony Zheng
Deputy General Manager and Company Secretary



Appointed Company Secretary in March 2011
Continues to serve as Director of the Secretarial Office to
the Board of the Company
Graduated from University of California at Berkeley with
Bachelor of Science in Civil Engineering
Ownership Length in
(%)
Kilometres
Expressway
No. of
Lanes
No. of Toll
Stations
No. of
Service
Areas
Start of
Operation
Remaining
Years of
Operation
1998
14
Shanghai-Hangzhou Expressway
- Jiaxing section
99.9995%
88.1
8
7
2
51%
11.1
6
1
0
100%
3.4
4
2
0
1995
14
- Hangzhou to Hongken section
100%
16.0
4
1
0
1992
13
- Hongken to Duantang section
100%
124.0
8
9
2
1995
13
- Duantang to Dazhujia section
100%
5.0
4
1
0
1996
13
73.625%
142.0
4
11
3
2000
16
100%
69.7
4
7
1
2005
16
- Yuhang section
- Hangzhou section
1995-
14
1998
Hangzhou-Ningbo Expressway
Shangsan Expressway
Jinhua section, Ningbo-Jinhua
Expressway
Financial Highlights
Operational Highlights
Results Highlights
Revenue Breakdown
Six months ended June 30
(Rmb million)
2015
2014 % change
Revenue
5,959
4,122
+44.6
(3,386)
(2,581)
+31.2
Gross profit
2,574
1,541
+67.0
Profit before tax
2,770
1,678
+65.1
Profit for the period
2,060
1,247
+65.1
1,514
1,063
+42.4
34.87
24.49
+42.4
Operating costs
Six months ended June 30
(Rmb million)
2015
2014
Toll
2,156
2,041
+5.6
883
1,135
-22.1
22
49
-54.6
2,862
878
+225.8
36
19
+87.4
5,959
4,122
+44.6
Service areas
Advertising business
Securities business
Others
Profit attributable to
Owners of the Company
Basic EPS (cents)
Total
55,000
3,439
2011
2012
(Full-trip)
45,000
4,122
3,442
Daily Traffic Volume of SHN Expressway
50,000
Revenue (six months ended June 30) (RMB million)
5,959
% change
2013
40,000
2014
35,000
2015
30,000
3,647
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
30,000 Daily
Traffic Volume of Shangsan Expressway
2011
25,000
2011(restated) 2012 (restated)
2013
2014
2015
(Full-trip)
Profit attributable to owners of the Company
(six months ended June 30) (RMB million)
2012
2013
20,000
2014
15,000
2015
10,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1,514
1,063
900
870
930
30000
Daily Traffic Volume of Ningbo-Jinhua
Expressway, Jinhua Section
2011
25000
2012
2013
20000
2014
15000
2011(restated) 2012(restated)
2013
2014
2015
2015
10000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec