Yuexiu Transport Infrastructure
Overview
Yuexiu Transport Infrastructure Limited (SEHK:1052) (formerly known as GZI Transport Limited)and its subsidiaries (collectively, “Group”) are principally engaged in investment, operation and management of toll expressways and bridges in Guangdong Province and other high growth provinces in the People's Republic of China (“PRC”), The Company's substantial shareholder, Guangzhou Yue Xiu Holdings Limited is a state-owned enterprise under the supervision of the State-owned Assets Supervision and Administration Commission ('SASAC') of the Guangzhou Municipal People's Government.1
As at 30 June 2019, the Group had a total of 12 investments in its operating expressways and bridge projects which included Guangzhou Northern Second Ring Expressway (“GNSR Expressway”), Guangzhou Western Second Ring Expressway (“GWSR Expressway”), Guangzhou Northern Ring Road (“Northern Ring Road”), Guangdong Humen Bridge (“Humen Bridge”), Shantou Bay Bridge and Qinglian Expressway, all of which are located within Guangdong Province; Cangyu Expressway in Guangxi Zhuang Autonomous Region (“Cangyu Expressway”); Jinxiong Expressway in Tianjin Municipality; Han-Xiao Expressway and Suiyuenan Expressway in Hubei Province; Changzhu Expressway in Hunan Province; Weixu Expressway in Henan Province. As at 30 June 2019, the attributable toll length of the Group’s subsidiaries is approximately 281.1 km (total toll length is approximately 337.1 km), the attributable toll length of the Group’s associates and joint venture is approximately 77.3 km, the total attributable toll length of expressways and bridges is approximately 358.4 km.2
Subsidiaries
GNSR Expressway
Cangyu Expressway
Jinxiong Expressway
Han-Xiao Expressway
Changzhu Expressway
Weixu Expressway
Suiyuenan Expressway
Associates and Joint Venture
GWSR Expressway
Humen Bridge
Northern Ring Road
Shantou Bay Bridge
Qinglian Expressway
Industry Overview
During the fist half of year 2019, global economic growth remains subdued. Economic activities were weaker than expected. The International Monetary Fund (IMF) lowered its forecast for world economic growth this year by 0.1 percentage points to 3.2% in its “World Economic Outlook”. Meanwhile, global trade and technology issues and geopolitical tensions have created protracted uncertainties.3
The PRC economy maintained an overall stable performance and recorded a steady growth. As indicated by data from the National Bureau of Statistics, GDP for the first half of 2019 amounted to RMB45.0933 trillion, representing a year-on-year increase of 6.3%. The economy continues to operate within a reasonable range, with continuing optimization and adjustment of economic structure.
The performance of domestic transportation sector remained generally stable. Investment on fixed assets in highway construction amounted to RMB950 billion, representing a year-on-year increase of 4.8%. Highway passenger turnover decreased by 4.7% and cargo turnover increased by 5.5% year-on-year, respectively.
During the first half of year 2019, domestic car ownership maintained a steady growth momentum. As at 30 June 2019, domestic car ownership reached 250 million vehicles, representing a year-on-year increase of 9.2%.
The projects invested and operated by the Group are distributed throughout Guangdong, Tianjin, Guangxi, Hunan, Hubei and Henan. The GDP growth of these regions for the first half of 2019 increased by 6.5%, 4.6%, 5.9%, 7.2%, 8.0 % and 7.7%, respectively
Industry Regulations
During the Reporting Period, the transportation sector is set to further deepen the reform of the toll road system. According to the “notice on the deepened reform of the toll road system and implementation plan of removing provincial toll stations on expressways” issued by the General Office of the State Council of the PRC, nationwide highway toll stations on provincial boundaries will be removed earlier than scheduled to implement no-stop fast tolling and thus further improve road traffic efficiency. All highway toll stations on provincial boundaries across the country will be removed by the end of 2019 in order to accelerate the application of electronic no-stop charging system. Classification standard for vehicle tolls on toll roads will be revised and the calculation formula for truck tolls will also be adjusted. The Group is responding actively to the impact of the reform of the toll road system.
During the Reporting Period, the new “Green Passage Toll Free Policy” was enforced on the expressways and bridges of the Group in compliance with the relevant government requirements. The enforcement of this policy led to a decrease in the toll income of the Group by approximately RMB119.78 million (first half of 2018: approximately RMB150.94 million). During the Reporting Period, the “Toll Free Policy for Passenger Cars with Seven Seats or Less during Major Holidays” was implemented on the expressways and bridges of the Group in compliance with the relevant government requirements. There were a total of 14 days of major holidays during the first half of the year that satisfies the requirements. Based on preliminary estimation, the implementation of this policy resulted in a decrease in the toll income of the Group by approximately RMB61.19 million (first half of 2018: approximately RMB51.95 million).
Financial highlight
The Group’s revenue increased by 0.7 percent to RMB1,380.9 million, operating profit decreased by 1.2 percent to RMB904.5 million and profit attributable to shareholders of the Company increased by 37.3 percent to RMB635.1 million in the fist half of year 2019.
Gross profit in the Reporting Period decreased by 2.1 percent to RMB976.4 million. Gross profit margin in the Reporting Period was 70.7 percent being 2.1 percentage point lower than same period in 2018.
Employees
As at 30 June 2019, the Group had approximately 1,493 employees of whom about 1,312 were directly engaged in the daily operation, management and supervision of toll projects. The Group remunerates its employees largely based on industry practice, including contributory provident funds and other staff benefits.
