Morningstar

Morningstar, Inc.

Equity Bottom-Up

We lower our fair value estimate for Guangshen to HKD 5.80 per share from HKD 6.30, following the company’s full-year 2018 result that was below our expectations. Net profit fell 23% year over year to CNY 784 million, pointing to a net loss of 180 million in the fourth quarter. We think the significant miss was primarily driven by the negative impact from the change of settlement method on freight transport, while rising overhaul and repair costs also dampened margins. Core operating performance…

No-moat Guangshen Railway’s fourth-quarter operating performance signaled a 33% traffic diversion on its Guangzhou-Kowloon line, which is 10% higher than our expectation. However, the shortfall should be offset by earnings upside from a 1% value-added tax rate cut announced by Premier Li Keqiang in his annual report. Guangshen’s core operations were decent. Passenger volume on the Guangzhou-Shenzhen intercity express and long-distance lines rose 8% and 0.5%, respectively, in the fourth quarter…

Guangshen Railway is one of the key railway operators in Southern China's prosperous Guangdong province. With key assets situated in the Pearl River Delta, its operations comprise both passenger and freight and connect southern China's three largest population centres: Guangzhou, Shenzhen, and Hong Kong. Guangshen's favourable geographic location and high-quality railway assets are key strengths. While rising competition from high-speed rail poses a threat to Guangshen's profitability and…

Guangshen’s first-half result, with net profit rising 29% to CNY 654 million, contained little in the way of surprises and implies an 8% fall in second-quarter earnings from a year ago, as the majority of overhaul costs were booked in during the quarter. Core operations were decent, and passenger volume on the Guangzhou-Shenzhen intercity express and Guangzhou-Kowloon train rose 9.7% and 11.2%, respectively, driving revenue up by 13.4% from a year ago. With 74% of the planned overhaul completed…

China

Guangshen Railway Company Limited provides railroad passenger, freight transportation, railway facilities, and technical services.  The Company also sells food, beverages and merchandise on aboard and in train stations.

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