Public (SHA: 600012)

Company Facts:

Anhui Expressway Company Limited (AECL) is mainly engaged in, operating and developing self-owned toll expressways and highways within Anhui Province, in the middle of southeast of China mainland. The company owns 100% rights and interests in three highways namely: Hening expressway, 205 national expressway (Tianchangxin route), and Lianhuo provincial road; they also have some holding in other two highways: Xuanguang highway and Gaojie highway. The above mentioned five roads are located between Changjiang river delta region and Zhujiang river delta region; in the center of Chinese national road transportation network. The geographic location is quiet an advantage and is bound to bring immense benefits to the company along with the future economical development in the middle part of Chinese mainland.   

Anhui Expressway Company Limited was started by Anhui Province Expressway General Company, approved by the National Structure Reform Committee; and was officially established in August 1995.

Financial Overview

Related companies: (Name, relationship, and percentage of ownership/rights & interests):

Anhui Expressway advertising Co. Ltd., Shareholding Company, percentage of rights and interests: 38%

Anhui Expressway Real Estate Co. Ltd. Shareholding Company, percentage of rights and interests: 20%

Hefei Information Investment Co. Ltd. Shareholding Company, percentage of rights and interests: 18%

Anhui Province Expressway General Company, Holding shareholder, percentage of ownership: 31.27%

Xuanguang Expressway Limited Liability Company, shareholding subsidiaries, percentage of ownership: 55.47%

Anhui Kangcheng Pharmaceutical Co. Ltd. shareholding subsidiaries, percentage of ownership: 65%

Anhui Province People’s Government National-owned Assets Administration and Regulatory Commission, Actual controller, percentage of rights and interests: 100%

Anhui Kaiyuan Highway Maintenance Engineering Co. Ltd. Invested by same shareholding company

Beijing Anlian Realty Development Co. Ltd. Invested by same shareholding company.

Anhui Highway Investment Co. Ltd.  Invested by the same shareholding company.

Anhui Anlian Highway Co. Ltd. Invested by same shareholding company

As on 18th July, 2008

Open: 5.20    High: 5.38    Low: 5.15        Close: 5.33   Vol.: 3,353,700       

Key Stats & Ratios

     Unite: RMB 10,000 Yuan

Daily Stats (last one month):

DATE           OPEN   HIGH   LOW     CLOSE     VOL

2008-07-18   5.20    5.38    5.15    5.33    3,353,700

2008-07-17   5.22    5.34    5.12    5.18    3,923,278

2008-07-16   5.21    5.47    5.09    5.13    4,032,130

2008-07-15   5.53    5.58    5.27    5.29    5,835,791

2008-07-14   5.20    5.60    5.15    5.50    7,542,351

2008-07-11   5.28    5.31    5.11    5.24    3,364,032

2008-07-10   5.27    5.38    5.25    5.28    5,389,444

2008-07-09   5.22    5.37    5.19    5.36    6,241,024

2008-07-08   5.21    5.22    5.06    5.17    3,284,162

2008-07-07   4.98    5.21    4.98    5.19    3,240,815

2008-07-04   4.98    5.04    4.93    4.98    1,858,123

2008-07-03   4.85    5.07    4.78    4.98    3,438,948

2008-07-02   4.88    4.96    4.85    4.89    1,761,209

2008-07-01   4.91    4.98    4.87    4.88    1,714,982

2008-06-30   4.87    4.95    4.80    4.91    1,494,935

2008-06-27   5.06    5.06    4.82    4.90    4,362,753

2008-06-26   5.26    5.28    5.13    5.23    2,373,529

2008-06-25   5.10    5.29    5.06    5.24    4,551,194

2008-06-24   5.15    5.29    5.11    5.29    3,573,894

2008-06-23   5.05    5.15    4.99    5.12    1,604,661

2008-06-20   4.98    5.20    4.88    5.10    2,989,845

2008-06-19   5.28    5.29    4.96    4.98    3,302,972

2008-06-18   5.15    5.34    5.01    5.33    3,785,477

2008-06-17   5.27    5.35    5.08    5.10    2,484,923

2008-06-16   5.40    5.48    5.25    5.29    1,557,723

To get the feel of the size of this industry and this particular company, the total length of toll expressways in the world is 140,000 km while 70% of them or 100,000km is in China. This definitely throws some light at the size of investment and revenue coming/expected from the massive infrastructure.

And worth mentioning is that, Anhui Expressway Company Limited is capable of self-developing and self-maintaining its highway interconnecting toll system and the comprehensive information system, which has promoted the company into the leading position in the industry. In addition, self-development of comprehensive information system project is encouraged and supported by government’s policies as it is one of the country’s National Torch Plan projects.

The company is continuously investing to improve its highways’ standards for providing better facility to its commuters and increasing the revenue coming from it; however, it is right to say that the company is spot on as three ongoing projects will contribute considerable profits in the near future. AECL’s business is also stimulated by fast growing regional economy, continuous increasing in numbers of private-owned vehicles, and the boosting of logistic industry.  In addition, the implement of the new fee standard, and charging according to weight system have liven the business incomes of the company.

However, the snow storm that occurred on March 2008 has brought 3% loss in company’s business income. But, it is barely matter the overall performance of the stock and investors’ confidence towards the company.

However, there are some negative influences caused by the government’s new policy on highway industry relating to the business income tax. The business income tax payable has been dramatically increased from original 15% to current 33%, which has already dragged the company’s net profit margin by 36.5% so far comparing to the same period of the previous year. Moreover, like the nature of the business, it requires huge amount of investment for a start up, mentioning this it is no surprise that the three ongoing projects demand big amount investment, which is creating problems for the company as taking loan from bank would be putting too much pressure on the company, while the revenue have been suffered by the govt. policy.

We assume, unlike international trade and many other industries, highway industry will not be affected by the American’ economical depression, in certain circumstances, Chinese government will have to encourage domestic demands to balance the slump in the foreign trade sector, it will in turn, encourage road transportation to a great deal. Therefore, I believe, at least from 2008 to 2010, a stable growth in road transportation is likely to be expected.

In my opinion, it is very likely that AECL will present its investors a gradual and stable return within 2 years period of time. In short term, there will be no big surprises on stock price’s either notable jump or fall.