[Huachuang Transportation & Performance Review] Sichuan Chengyu: Steady profit growth by 2025, external acquisitions expand growth space, the "big" group and "small" company logic continue to strengthen

(Source: Huachuang Securities)

In accordance with the “Measures for the Administration of the Suitability of Securities and Futures Investors” and the supporting guidelines, this material is only intended for professional institutional investors among Huachuang Securities clients. Please do not forward this material in any form. If you are not a professional institutional investor among Huachuang Securities clients, please do not subscribe to, receive, or use any information in this material. This material is difficult to set access permissions for; if it causes any inconvenience, we apologize. Thank you for your understanding and cooperation.

Company Announcement: 2025 Annual Report:

1）In 2025, the company achieved operating revenue of 8.758 billion yuan, a year-on-year decrease of 15.48%; net profit attributable to the parent company was 1.513 billion yuan, a year-on-year increase of 3.72%; net profit attributable to the parent company after deducting non-recurring gains and losses was 1.447 billion yuan, a year-on-year increase of 4.1%.

2）By quarter: For 2025 Q1–Q4, the company’s operating revenue was 18.5, 22.76, 19.6, and 26.72 billion yuan, respectively, with year-on-year changes of -8.08%, -32.17%, -1.52%, and -11.04%; net profit attributable to the parent company was 4.56, 3.81, 4.63, and 2.13 billion yuan, respectively, with year-on-year changes of +16.61%, +24.17%, +8.96%, and -36.56%; net profit attributable to the parent company after deducting non-recurring gains and losses was 4.43, 3.73, 4.52, and 1.78 billion yuan, respectively, with year-on-year changes of +16.51%, +27.03%, +8.8%, and -40.56%.

3）Profitability: In 2025, the company’s gross profit margin was 34.84%, up 2.98 percentage points year over year; net profit margin was 17.63%, up 2.7 percentage points year over year; the period expense ratio was 13.02%, down 1.19 percentage points year over year. Among them, financial expenses benefited from the decline in the execution rate of existing contracts, decreasing 29% year over year to 5.81 billion yuan.

4）Dividend: For 2025, the company plans to distribute a cash dividend of 0.297 yuan per share to all shareholders (tax inclusive), with a total planned cash dividend amount of 9.08 billion yuan (tax inclusive), representing a dividend payout ratio of 60.02%. The corresponding dividend yield as of 2026/4/1 is 5.2%.

The core road assets maintained steady operations, and the high-growth potential of the Suiguang–Suixi Expressway and Suixi (Suiguang-Suixi) Expressway has become more prominent.

In 2025, the company’s core toll highway main business remained steady. The company achieved full-year toll revenue of 4.686 billion yuan, a slight year-on-year decrease of 1.92%. By segment, Suiguang–Suixi Expressway and Chengyu Expressway both achieved positive growth in traffic volume and toll revenue, among which

Chengyu Expressway: due to the increased density of high-speed rail in the surrounding areas, passenger vehicle traffic declined to some extent, but truck traffic increased year over year, and toll revenue increased by 1.53%;

Suiguang–Suixi Expressway: due to upgrades, renovation and the closure of multiple parallel roads in the surrounding area in 2025, it absorbed and redistributed regional traffic flow, resulting in toll revenue increases of 3.77% and 10.3%, respectively;

Erxixi Expressway achieved revenue of 804 million yuan. From 2023 to 2025, it cumulatively achieved net profit of 237 million yuan, completing the performance commitments for 2023–2025 (the committed amount is 231 million yuan). In addition, the toll collection period for the North City Exit Expressway expired and toll collection ceased in September 2025, which will have some impact on the company’s 25Q4 and future performance. However, since this road asset’s toll revenue contribution ratio was relatively small previously, the overall impact is controllable.

Profit growth driven by a reduction in financial expenses, with the asset-liability ratio continuing to improve.

In 2025, the company’s selling expenses were 0.73 billion yuan, down 4.74% year over year; management expenses were 4.83 billion yuan, down 16.27% year over year; financial expenses were 5.81 billion yuan, saving 2.38 billion yuan, down 29.03% year over year. This was mainly attributable to the significant results of the company’s optimization of existing debt. We believe that in a low interest-rate environment, the decline in financial expenses will be sustainable.

The asset-liability ratio accelerated its improvement. As of the end of 2025, the company’s asset-liability ratio was 66.65%, down 1.43 percentage points from the end of 2024 (which was already down 3 percentage points from the end of 2023).

Outbound M&A implementation, ensuring long-term sustainable development.

In December 2025, the company announced that its wholly owned subsidiary Shunan Company planned to acquire 85% of the equity interest in Hubei Jingyi Expressway Co., Ltd. held by Shudao Innovation for 2.409 billion yuan in cash. In March 2026, the equity handover for this transaction was completed, and Jingyi Company was officially included in the scope of the consolidated financial statements. According to the transaction plan previously announced by the company, taking into account the integrated performance commitments and government subsidies, after Jingyi Expressway is incorporated, it is expected to improve the company’s overall net profit and shareholder returns to a good extent.

Investment recommendation:

1）Profit forecast: We expect the company’s profit forecast for 2026–28 to be 16.5, 17.3, and 17.9 billion yuan, respectively, corresponding to PE ratios of 11, 10, and 10 times for 2026–28, respectively.

2）We believe that under the classic “large group, small company” investment logic, the company will expand, strengthen, and optimize its highway main business, with sufficient growth potential.

3）Target price: Based on the expected 60% dividend payout ratio for 2026, the corresponding dividend yield for A-shares in 2026 is 5.7%. We maintain our valuation approach: using the expected 4% dividend yield for A-shares as its pricing basis, emphasizing a “Strong Promote” rating; using the expected 5% dividend yield for H-shares as its pricing basis, also emphasizing a “Strong Promote” rating.

Risk warning: Economic downturn, and a clearly noticeable decline in traffic volume.

For details on specific matters such as investment recommendations, please refer to the report titled “Sichuan Chengyu (601107) 2025 Annual Report Review: Steady Profit Growth in 2025, External M&A Opens Growth Space, Continued Reinforcement of the ‘Big’ Group and ‘Small’ Company Logic,” published by Huachuang Securities Research Institute on April 2, 2026.

Legal Disclaimer:

This material is from research reports that have already been published by Huachuang Securities Research Institute. If there is any ambiguity in the excerpts or interpretations of the report, the full content of the report as of the date of publication shall prevail. Please note that this material only reflects judgments made on the date the report was published. Related analytical opinions and forecasts may be changed without notice based on subsequent research reports published by Huachuang Securities Research Institute. Other business departments or affiliated institutions of Huachuang Securities may independently make investment decisions that are inconsistent with the opinions or recommendations in this material. The prices, values, and income of the securities or financial instruments referred to in this material may go up or down; past performance should not be used as an indication of future performance or as any form of guarantee. This material is for subscription holders’ reference only and should not be regarded as an offer, solicitation, or invitation to sell, buy, or subscribe to securities or other financial instruments. Subscription holders should not rely solely on the information in this material to replace their own independent judgment; they should make investment decisions independently and bear their own investment risks. Huachuang Securities shall not be liable for any direct or indirect losses arising from the information involved in the use of this material, nor for any other losses related to it.

A wealth of information and precise insights—available on the Sina Finance app