Sichuan Expressway Company Limited: history, ownership, mission, how it works & makes money

A Brief History of Sichuan Expressway Company Limited

Sichuan Expressway Company Limited, based in Chengdu, China, operates as a leading toll road operator in Sichuan Province. The company was established in 1997 and has since played a crucial role in the development of transportation infrastructure in the region.

Initially, its primary asset was the Chengyu Expressway, which spans approximately 371 kilometers and connects Chengdu with Chongqing. This expressway has significantly improved logistics and passenger transport in southwestern China.

In 2005, Sichuan Expressway was listed on the Hong Kong Stock Exchange under the stock code 1776.HK, raising approximately HKD 1.5 billion in its initial public offering (IPO).

As of the end of 2022, the company operated over 1,000 kilometers of expressways, including several major routes like the G75 Lanzhou-Haikou Expressway, further solidifying its position in the market. In the 2021 financial year, Sichuan Expressway reported a revenue of approximately CNY 4.59 billion, with a net profit of CNY 1.23 billion.

Key financial metrics over recent years highlight the company’s growth:

In 2022, Sichuan Expressway also focused on enhancing its toll collection processes through the integration of advanced technologies such as electronic toll collection (ETC) systems, which improved efficiency and customer satisfaction. The company had already seen its ETC rate exceed 90% by the end of 2022.

Furthermore, Sichuan Expressway Company Limited has sought to diversify its investment portfolio. This includes engaging in various infrastructure projects, including public transportation upgrades and logistics services, which aligns with China’s broader national strategy of improving interconnectivity across regions.

Looking at the stock performance, as of September 2023, the company's share price was approximately HKD 8.50, reflecting strong investor confidence in its growth potential and stability within the toll road sector amidst increasing demand for transportation infrastructure.

In terms of dividends, the company has maintained a progressive dividend policy, with dividends per share declared at CNY 0.25 for the fiscal year 2022, marking a 10% increase from the previous year, and continuing a growth trend that has attracted long-term investors.

Overall, Sichuan Expressway Company Limited has demonstrated resilience and adaptability in its operations while contributing significantly to the economic development of Sichuan Province through improved transportation networks and infrastructure investments.

A Who Owns Sichuan Expressway Company Limited

Sichuan Expressway Company Limited, a major player in China's toll road industry, is listed on the Hong Kong Stock Exchange under the ticker symbol 01785.HK. The company engages in the construction and operation of expressways, primarily in the Sichuan province. As of the latest data, the ownership structure is as follows:

The ownership dynamics reveal a significant state influence with a combined stake of approximately 60.12% held by state-owned entities. The public float accounts for close to 39.88%, making it accessible for individual and institutional investors alike.

According to the 2022 Annual Report, Sichuan Expressway generated revenue of approximately RMB 3.20 billion, a 6.5% increase from the previous year. The net profit attributable to shareholders was reported at approximately RMB 1.20 billion, reflecting a profit margin of around 37.5%.

In terms of financial performance, the company's earnings per share (EPS) for the fiscal year 2022 stood at RMB 0.32. As of the end of 2022, Sichuan Expressway's total assets were valued at approximately RMB 28.90 billion and total liabilities at RMB 20.50 billion, resulting in a debt-to-equity ratio of 0.71.

The stock performance has shown resilience with a 52-week range of RMB 5.20 to RMB 7.80 per share, currently trading around RMB 7.10 in early October 2023. The dividend yield stands at 4.5%, making it an attractive option for income-focused investors.

In the context of broader market trends, Sichuan Expressway's position is supported by the Chinese government's ongoing investments in infrastructure development, particularly in western regions. The company continues to benefit from increased vehicular traffic and toll revenue due to rising economic activities in Sichuan province.

Sichuan Expressway Company Limited Mission Statement

Sichuan Expressway Company Limited (Sichuan Expressway) is primarily engaged in the investment, construction, and management of expressways. The mission statement of the company emphasizes its commitment to delivering proficient road transportation solutions while ensuring operational excellence and safety. The company aims to support regional economic development through efficient infrastructure services, pooling resources to enhance transportation networks.

In its mission, Sichuan Expressway outlines a commitment to sustainability and safety. This is reflected in its continuous efforts towards environmental protection during construction projects and subsequent operations. The company aligns with governmental transportation policies and contributes to regional economic growth through infrastructure enhancements.

As part of its strategic vision, Sichuan Expressway seeks to leverage technology to improve operational efficiencies. This includes the integration of intelligent transportation systems to optimize traffic flow and enhance user experience on its managed expressways. The mission also encompasses fostering innovation in construction practices to reduce costs and timeframes.

The company has reported steady growth in its traffic volume, with an average daily traffic of over 130,000 vehicles on key expressways. This growth is indicative of increasing demand for efficient transportation solutions in the region. Sichuan Expressway’s efforts to enhance its expressway networks are supported by ongoing maintenance and upgrade projects, aiming to improve road quality and safety standards.

This performance underscores the company’s effective cost management strategies and operational efficiencies. The growing profitability and robust revenue generation are key components of its ongoing mission to deliver superior transportation services. Sichuan Expressway remains committed to investing in its infrastructure, ensuring that it meets the evolving needs of its users and supports sustainable development initiatives in the region.

How Sichuan Expressway Company Limited Works

Sichuan Expressway Company Limited operates primarily in the construction, maintenance, and management of toll expressways in China. The company is one of the largest expressway operators in Sichuan Province, leveraging its extensive network to generate revenue through toll collections. In 2022, Sichuan Expressway reported a revenue of approximately RMB 5.2 billion, an increase of 8.3% year-over-year.

The company's operational model includes the development and management of a total of 1,200 kilometers of expressways, with a significant portion classified as major toll roads. The toll rates vary based on vehicle types and distances travelled, which contributes to the company's revenue structure. The company has a diverse fleet of expressways, including:

• Sichuan Chengdu-Chongqing Expressway
• G42 Hubei-Sichuan Expressway
• Sichuan G65 Baotou-Maoming Expressway

In 2022, the total toll revenue from these expressways approximated RMB 3.1 billion, reflecting a strong performance despite fluctuating traffic patterns. The toll collection system integrates electronic and manual methods, ensuring efficient revenue capture.

The company’s cost structure comprises operational, maintenance, and administrative expenses, which amounted to RMB 2.3 billion in 2022, accounting for an operational efficiency ratio of about 44% relative to total revenue.

Furthermore, Sichuan Expressway Company has diversified its business portfolio by investing in ancillary services such as fuel stations and rest areas along its expressways. This strategic move yielded an additional revenue stream of approximately RMB 500 million in 2022.

With respect to asset management, Sichuan Expressway’s total assets were reported at RMB 25 billion as of the end of 2022. This includes both fixed and current assets, with fixed assets constituting about 80% of the total.

As part of its future growth strategy, the company aims to expand its expressway network by exploring public-private partnership (PPP) opportunities in nearby provinces, capitalizing on the increasing demand for transportation infrastructure across China. In 2023, the company plans to initiate construction on 300 kilometers of new expressway projects.

Moreover, the ongoing impact of the COVID-19 pandemic on traffic volumes has been mitigated by innovations in digital toll collection systems. By 2022, it was estimated that 30% of toll transactions were conducted through electronic means, streamlining operations and reducing costs.

Overall, Sichuan Expressway Company Limited exemplifies a solid business operation anchored in a vast infrastructure network, with revenues significantly driven by toll collections while diversifying into complementary services that enhance customer experience and profitability.

How Sichuan Expressway Company Limited Makes Money

Sichuan Expressway Company Limited is a key player in the transportation infrastructure sector in China, primarily generating revenue through the operation and management of expressways. Its business model is centered on toll collection from vehicles using its extensive network of expressways.

In 2022, Sichuan Expressway reported a total revenue of approximately RMB 4.45 billion, a slight increase compared to the RMB 4.35 billion recorded in 2021. This growth can be attributed to the rebound in traffic volumes following the easing of COVID-19 restrictions.

The company operates several major expressways, including the Chengdu-Chongqing Expressway and the G5 Beijing-Kunming Expressway. Tolls are the primary source of income, with rates varying by vehicle type and distance traveled. The toll revenue for the year 2022 was around RMB 3.9 billion, representing a 5% increase from the previous year.

The traffic volume is a critical factor driving revenue. In 2022, Sichuan Expressway recorded approximately 120 million vehicles using its expressways. This marked an improvement as the public gradually returned to normal travel patterns.

In addition to toll revenues, Sichuan Expressway diversifies its income sources through investments in other infrastructure projects. The company's investment portfolio includes equity stakes in various toll road projects, which contributes to non-operating income. The financial returns from these investments amounted to around RMB 0.55 billion in 2022, accounting for roughly 12.4% of total revenue.

The company benefits from a favorable regulatory environment, with local governments supporting the expansion and maintenance of expressway networks. Cost management efforts have also improved profitability; the operating profit for 2022 was reported at RMB 1.20 billion, reflecting an operating margin of approximately 27%.

Looking ahead, Sichuan Expressway aims to further enhance its operational efficiency through technology integration, including electronic toll collection systems, which reduce congestion and improve cash flow. With anticipated traffic growth, the company projects a continued upward trend in both total and toll revenues for the upcoming years.