[ET Net News Agency, 29 August 2019] HSBC Global Research lowered its target price for
Zhejiang Expressway (00576) to HK$10 from HK$11 and maintained its "buy" rating.
The research house said the company's 1H NPAT rose 8% to RMB1,978m, driven mainly by the
contribution of the securities business. Management believes that the toll revenue outlook
for 2H remains challenged by macroeconomic uncertainty and ETC (Electronic Toll
Collection) related discounts.
Despite toll revenue growth perhaps seeing weakness in the near term, management said it
is still confident of maintaining a stable dividend payment on the absolute amount. On the
other hand, the company is still eyeing potential investment opportunities, mainly
focusing on toll road assets.
HSBC believes the ETC discount could have a negative effect of about 5-7% on the
company's earnings for FY2020. It adjusted its earnings estimates for FY2019 and FY2020 by
-8%/-8%, respectively. (KL)