Yuexiu Transport Infrastructure Limited (“Company”) announced the 2016 interim results on 17th August.
During the reporting period, the Company overcame the downward pressure from the economy and benefited from additional contribution from the Suiyuenan Expressway upon its incorporation into the consolidated statements and the organic growth of existing projects, including GNSR Expressway, recording continuous stable increase in its operating results. Both operating income and profit before tax achieved double-digit growth year-on-year. In particular, the operating revenue of the Group hit another record high with a year-on-year growth of 32.4% to RMB1,234 million. Profit after tax also recorded a 14.6% year-on-year growth to RMB 466 million. If excluding the additional income contribution from the Suiyuenan Expressway, toll income reported a 12.01% year-on-year growth to an absolute amount of RMB1,038 million .
The Board resolved to declare an interim dividend of RMB0.11 per share (equivalent to HK$0.13 per share) for the first half of 2016, up by 16.3% year-on-year. This also represents an interim dividend payout ratio of 53.3%, reflecting the Company’s stable and consistent dividend policy.
During the reporting period, the Group’s projects sustained year-on-year growth momentum in both traffic volume and toll revenue. Six of our toll-road projects recorded double-digit year-on-year growth in toll revenue. Such projects included GNSR Expressway, Cangyu Expressway, Han-Xiao Expressway, Changzhu Expressway, GWSR Expressway, Northern Ring Road and Shantou Bay Bridge.
In the first half of 2016, despite of a complicated and rigorous global economic landscape, China’s economy was operated within reasonable range and registered a stable growth due to the combined effect of the advancing supply side structural reform and policies which were continuously taking effects to stabilize economic growth. Policies for the toll road sector remained stable in China and the domestic transport industry continued to develop steadily. The Company actively promoted and followed the principle of ‘Asset Management’ to improve overall profitability.
In the future, infrastructure will keep playing an important role in the economic development process. Both central and local governments have announced the corresponding plans of highway construction, which will bring potential investment opportunities. The Company will pay close attention to any investment opportunities within the sector, including the acquisition of projects in central and western parts of the country where the potential for economic growth remains high and those in provinces which can benefit from the transfer of labor-intensive processing industries from the eastern and coastal regions to optimize the Company’s overall asset portfolio and bring new growth driver.
On financing strategy, after the success of public issuance of RMB 1 billion Panda Bonds which were listed in Shanghai Stock Exchange in late March this year, the Company again gained CSRC’s approval for a further issuance of Panda Bonds with RMB 2 billion limit. In view of the falling interest rates in Mainland China, the depreciation pressure on the RMB, the Company will monitor and evaluate its exposure to currency risk on an ongoing basis and implement appropriate hedging strategy in due time. The Company will keep optimizing the debt structure and reducing overall costs of debts to lower the exchange risk through RMB loans from domestic and offshore commercial banks and panda bonds.
Upon completion of the acquisition of Suiyuenan Expressway, the Company will reduce our debts to maintain the stability of our financial position. Meanwhile, the impact of the potential acquisition and business operation on the credit metrics will be fully considered. The management will also continuously review and put forward proposals which optimize our entire asset portfolio so as to improve the profitability of the Group and create reasonable returns for shareholders.