Shenzhen Expressway Announces 2018 Third Quarter Results

 

(Hong Kong, 25 October 2018) Shenzhen Expressway Company Limited (Stock Code: 600548. SH, 00548. HK) (hereinafter referred to as “Shenzhen Expressway” or the “Group”) announced the unaudited operational results for the third quarter of 2018. According to the report, Shenzhen Expressway realised net profit of approximately RMB552 million in the third quarter of 2018; net profit was approximately RMB1, 521 million and earnings per share was RMB0.697 during the period from January to September 2018.

In the first three quarters, the Group’s net profit grew 30.43% YOY, primarily attributable to the increase of the toll revenue from the toll highways originally operated and invested by the Group, revenue contributed by newly acquired projects including Derun Environment and Yichang Expressway, recognition of compensation income of the Meilin Checkpoint Renewal Project and income from the transfer of equity interests in Yuelong Company.

During the period from January to September 2018, the Group recorded revenue of RMB4, 140 million, representing a YOY increase of 13.31%, among them, the toll revenue increased by 14.95% YOY, mainly due to the consolidation of Shenchang Company and Yichang Company into the Group’s financial statements and the natural increase in traffic volume of the existing ancillary toll highways. Toll revenue remained the major source of income for the Group.

During the period from January to September 2018, the Group’s cost of services grew 13.34% YOY, mainly due to the consolidation of Shenchang Company and Yichang Company into the Group’s financial statements, the increase in the depreciation and amortization expenses with the traffic volume increase of the existing ancillary toll highways and the increase in the cost of entrusted construction and management services. In addition, exchange losses were recorded since the US dollar bonds were affected by the depreciation of RMB, and interest expense increased due to the rising lending scale. During the reporting period, the financial expenses increased by 51.19% YOY. To avoid the risks relating to fluctuation in exchange rate, the Company entered into a foreign exchange swap transaction to lock into the foreign exchange risk, when the US dollar bonds were first issued. During the reporting period, as RMB was depreciated, the Group hedged against the exchange losses with the gain arising from changes in fair value of foreign exchange swap recognized.

In the third quarter of the year, United Land Company, Meilin Checkpoint Renewal Project’s project company, was intended to be publicly listed on the Shenzhen United Assets and Equity Exchange , using competitive negotiation to conduct a review, and introducing a professional real estate developers as a strategic investor. A few days ago, the relevant public listing and competitive negotiation were completed, and the strategic investor is Vanke, the price for the capital increase will be RMB2.9 billion.. As a leading and professional real estate developer in China, Vanke will help ensure project quality, enhance project management and overall return, and achieve the desired goals. Such matter is subject to the approval by shareholders at the general meeting to be held on 13 November, 2018.

Looking ahead, the scale of the reform of state-owned enterprise will increase and the development plans in relation to the Guangdong-Hong Kong-Macao Greater Bay Area and Shenzhen-Shantou Special Cooperation Zone will be gradually implemented. Under such avourable circumstances, the Group will continue to maintain highway business and environmental protection business as double core businesses, and consolidate development achievements, so as take advantage of the resource integration to expand the upstream and downstream industrial chain of the two major businesses of the Group. It will also proactively promote and make new industrial investment and strive to open up new horizons for the Group’s operation and growth, with a view to maximizing the return to the shareholders.

 

Net Profit Amounts to RMB1.521 billion in First Three Quarters, Representing a YOY Growth of 30.43%

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