Zhejiang Expressway Co. Ltd. Class H · HKEX:576
Zhejiang Expressway Co. Ltd. Class H — CLSA China Forum 2005
32 slides from Zhejiang Expressway Co. Ltd. Class H's conference presentation, May 2005
Slide 1: Corporate Presentation - Creating Value through Service Excellence
Corporate Presentation Creating Value through CLSA Service Excellence. China Forum 2005 May [], 2005 Beijing
Slide 2: Agenda
Agend a Shareholders: Outstanding Returns Customers: Good Travel Conditions Other Stakeholders / Society: Harmony and Contribution Furthering Growth, Enhancing Value Future Prospects
Slide 3: Our Corporate Mission vs. Achievements
Our Corporate Mission vs. Achievements Our Corporate Mission Pursue Enhance Excellence Value Our Achievements Shareholders: Outstanding Returns Service Excellence Customers: Good Travel Conditions Other Stakeholders / Society: Harmony and Contribution
Slide 4: Shareholders: Outstanding Returns
Shareholders: Outstanding Returns
Slide 5: Another Good Year
Another Good Year Results (audited) 2004 2003 % change Year ended December 31, (RMB ’000) (RMB ’000) Turnover 3,131,993 2,471,805 +26.7% Operating costs (845,875) (731,451) +15.6% Gross profit 2,286,118 1,740,354 +31.4% Other revenue 41,646 127,285 -67.3% Administrative expenses (109,986) (114,629)
Slide 6: Sustained Strong Earnings
Sustained Strong Earnings RMB million EPS - RMB cents 3,500 3,132 50 3,000 2,472 2,500 2,168 40 2,000 1,723 1,500 28.22 30 1,189 23.23 1,000 20.50 17.51 1,226 1,009 20 500 14.64 890 761 636 0 10 2000 2001 2002 2003 2004 Turnover Net Profit EPS CAGR: +27.4% +17.8% +17.8% Note: CAGR = Compounded Annua
Slide 7: Excellent Returns
Excellent Returns ROE H-Share Stock Price vs. HSCEI CAGR: +12.6% 14% 12% 11.43 Daily Net Change (%) 9.20 9.94 10% 35% 8.19 8% 7.10 30% 6% 25% 4% Zhejiang Expressway 2% 20% 0% 15% 2000 2001 2002 2003 2004 10% Dividend Payout 5% RMB cents 0% 20 -5% 15 HSCEI -10% 15 10 11 -15% 9 7 7 -20% 5 4 4 4 -25% 2
Slide 8: Customers: Good Travel Conditions
Customers: Good Travel Conditions
Slide 9: Increasing Customer Demand
Increasing Customer Demand China’s GDP continued to grow at 9.5%, highest since 1997 Zhejiang Province’s GDP grew at 14.3%, outpacing the national growth rate by 4.8 percentage points GDP Growth Rate 16% 14.0 14.3 PRC 14% 12.4 Zhejiang 12% 11.1 11.0 10.1 10.5 10.0 9.5 10% 9.1 8.8 7.8 8.0 8.0 8% 7.1
Slide 10: Increasing Customer Demand (cont'd)
Increasing Customer Demand (cont’d) 2004 national vehicle sales increased by 15.5% National Vehicle Sales No. of Vehicles Sold (’000) 6,000 5,071 5,000 4,391 4,000 3,249 3,000 2,364 2,089 2,000 1,604 1,832 1,000 0 1998 1999 2000 2001 2002 2003 2004
Slide 11: Robust Traffic Growth
Robust Traffic Growth Daily Traffic Volume Shanghai-Hangzhou-Ningbo Expressway Full trips 37,500 2005 2004 32,500 2003 248 km in length 27,500 2002 Completed in Dec 1998 22,500 2001 Traffic 20.3% 17,500 2000 Volume 1999 From 2003 1998 12,500 Toll 21.9% 7,500 Income From 2003 Jan Mar May Jul Sep Nov
Slide 12: Robust Traffic Growth (cont'd)
Robust Traffic Growth (cont’d) Daily Traffic Volume Shangsan Expressway Full trips 22,500 2005 2004 17,500 142 km in length 2003 Completed in Dec 2000 12,500 2002 Traffic 29.9% 2001 Volume From 2003 7,500 2000 1999 Toll 34.4% 2,500 Income From 2003 Jan Mar May Jul Sep Nov
Slide 13: Creating Safer and Smoother Traffic
Creating Safer and Smoother Traffic Crackdown on truck overloading Aimed at creating a safer traveling and smoother traffic Initiated since June 20, 2004 Reduced truck overloading incidents from 80% to 10% Noticeable Increase in Truck Traffic Percentage of Class 4 & 5 Trucks in 2004 7% Shangha
Slide 14: Creating Safer and Smoother Traffic (cont'd)
Creating Safer and Smoother Traffic (cont’d) Effective January 1, 2005: Lowered toll rates for heavy tr ucks > 10 tons Effectively reduced incidents of overloaded trucks and future mai ntenance costs Before adjustment Classification Vehicle type Entrance fee Distance-based fee Class 4 10~20 (inclusi
Slide 15: Creating Better Road Conditions
Creating Better Road Conditions Major road surface-overlaying project on Shanghai-Hangzhou- Ningbo Expressway completed in 2004 Cost incurred in 2004: RMB95.4 millio n Total costs incurred: RMB411.1 million Traveling conditions on the expressway improved substantially
Slide 16: Adding Extra Value to Customers
Adding Extra Value to Customers Development Co Service Areas Operation of service areas, advertising and vehicle servicing along the Group’s expressways Turnover grew 55.2% to reach RMB218.5 million (pro forma basis) Roadside Advertising Net profit up 58.9% to RMB38.7 million (pro forma basis) Vehic
Slide 17: Other Stakeholders / Society: Harmony & Contribution
Other Stakeholders / Society: Harmony & Contribution
Slide 18: Excellence for All
Excellence for All Value for Shareholders Service Excellence Value for Value for Other Customers Stakeholders/ Society
Slide 19: Harmony, Not Only Profits
Harmony, Not Only Profits Staff Performance-based incentives Excellent communication between management and staff Society Care for the environment: full environmental consideration in early planning stage of all projects Maintain a quality environment for expressways greater enjoyment for expressw
Slide 20: Furthering Growth, Enhancing Value
Furthering Growth, Enhancing Value
Slide 21: Optimizing Our Existing Assets' Capacity
Optimizing Our Existing Assets’ Capacity Widening Project on SHANGHAI Shanghai-Hangzhou-Ningbo Expressway Phase II HANGZHOU Phase III Cost/ Phase I NINGBO Phase From To Length Lane From To Budget (RMB mn) Cost: SHANGSAN I Hongken Guzhu 44km 48 Oct 00 Dec 03 550 EXPRESSWAY Budget: II Dajing Fengjing
Slide 22: Investing in New Assets: Jiashao Expressway
Investing in New Assets: Jiashao Expressway Jiashao Expressway To invest RMB1,145.375 million fo r a 35% shareholders’ interest Total length of 69.23km, including a 12.32km bridge crossing over the Qiantang River Planned as an 8-lane expressway Expected to commence operation b y 2009 Traffic
Slide 23: Future Prospects
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Slide 24: The Macro Environment Bodes Well
The Macro Environment Bodes Well 2005 PRC economic prospects point to continued strong growth Zhejiang’s GDP is expected to continue its double-digit growth China’s entry into WTO opens up w orld market for Zhejiang’s competit ive industries Further integration and urbanization of Yangtze River Delt
Slide 25: The Macro Environment Bodes Well (cont'd)
The Macro Environment Bodes Well (cont’d) Growth Rates in Total Mileage of Expressways Traffic Volume vs. GDP in Zhejiang Province 30.0% km 5,000 5,000 25.0% 4,500 4,000 20.0% 3,300 15.0% 3,000 10.0% 2,000 1,474 5.0% 1,000 1998 1999 2000 2001 2002 2003 2004 GDP growth rate in Zhejiang Province Traff
Slide 26: Enhancing our Assets to Capture Growth
Enhancing our Assets to Capture Growth Phase II of the widening project will be completed by end-2005 Vehicle handling capacity substantially optimised Traveling conditions between Shanghai and Hangzhou greatly improved Preparatory work for Jiashao Expressway Government approval expected to be
Slide 27: Our Goals
Our Goals Shareholders Greater Returns Our Goals Other Stakeholders / Customers Society Safer & More Comfortable Greater Contribution Traveling Conditions
Slide 28: Appendices
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Slide 29: Appendix I – Balance Sheet
Appendix I – Balance Sheet Balance Sheet (audited) 2004 2003 % change Year ended December 31 (RMB mil.) (RMB mil.) Cash and cash equivalents 803 819 -1.8% Short-term investments 676 1,104 -38.7% Total assets 15,461 15,069 +2.6% Total liabilities 3,649 3,910 -6.7% Total debt 2,443 2,720 -10.2% Total
Slide 30: Appendix II – New Toll Rates
Appendix II – New Toll Rates Shanghai-Hangzhou-Ningbo Expressway Class Vehicle Type Entrance Fee Mileage Fee (RMB) (RMB / km) 1 Passenger vehicles with up to 20 seats 5 0.45 Trucks of 2 tons or below 2 Passenger vehicles btw. 20 to 40 seats 10 0.80 Trucks between 2 to 5 tons 3 Buses with more than 4
Slide 31: Appendix III – Organization Chart
Appendix III – Organization Char t Zhejiang Expressway Co., Ltd. 99.9995% 51% 73.625% 50% 35% Jiaxing Co Yuhang Co Shangsan Co Shida Co Jiashao Co 50% 51% 27.58% Petroleum Co Development Co JoinHands Technology 51% 70% 85% Lutong Advertising Advertising Co Services Co
Slide 32: Appendix IV – Zhejiang Province Map
Appendix IV – Zhejiang Province Ma p