Benefiting from stable toll road business, revenue of Anhui Expresswayincreased by 4.7% yoy to RMB624 million in 3Q15. Due to the reduction ofdebt, finance cost decreased by 37% yoy to RMB21 million. Due to fluctuationof investment income from non-recurring items, shareholders’ profitdecreased by 0.2% yoy to RMB232 million in 3Q15.
The Company released operational statistics for the first ten months of 2015.During the period, total toll revenue of the Company’s expressways increasedby 4.6% yoy to RMB1,935 million. Looking ahead, we expect theCompany’s major expressways to continue the organic growth.
We think the toll road business of the Company will remain stable. The currentvaluation is at high level compared to historical valuation of the Company.However, considering the peers valuation, we think its shares are stillattractive. Moreover, H-shares of the Company are trading at 55% discount toits A-shares, a relatively high level among dual-listing expressway companies.We think the share price of the Company will be supported. Therefore, weupgrade investment rating to “accumulate” and maintain TP of HK$8.00.Our TP represents 12.3x, 11.8x and 11.5x FY15-FY17 PER, respectively.