Guotai Junan Securities: SHANGHAI IND H operates steadily, with outstanding growth in its consumer goods and health sectors, maintaining an "Outperform" rating
Guotai Junan Securities maintains a "Outperform" rating for SHANGHAI IND H, expecting the net profit attributable to the parent company for 2025-2027 to be HKD 2.934 billion, HKD 3.084 billion, and HKD 3.197 billion, respectively. The company's infrastructure and environmental protection are stable, with significant growth in the consumer goods and health sectors, an increase in the dividend payout ratio, and a decrease in financial expenses, indicating promising investment value in the future. In the first half of the year, infrastructure and environmental protection revenue was HKD 4.433 billion, consumer sector revenue grew by 11%, and the health sector's net profit increased by 118.4% year-on-year
According to the Zhitong Finance APP, Guosen Securities released a research report stating that it maintains an "outperform" rating for Shanghai Industrial Holdings (00363). The company's infrastructure and environmental protection sectors are stable, with significant growth in the consumer and health sectors. The increase in the dividend payout ratio and the decrease in financial expenses provide support for future investment value. Guosen Securities expects Shanghai Industrial Holdings' net profit attributable to shareholders to reach HKD 2.934 billion, HKD 3.084 billion, and HKD 3.197 billion from 2025 to 2027, with year-on-year growth rates of 4.8%, 4.8%, and 3.7%, respectively.
Key Points from Guosen Securities:
Core Business in Infrastructure and Environmental Protection is Stable
In the first half of this year, the infrastructure and environmental protection sector achieved revenue of HKD 4.433 billion and a net profit of HKD 933 million. The firm believes that the company's core business remains stable, with the highway sector generating revenue of HKD 1.019 billion, a year-on-year increase of 5.1%, and traffic volume increasing by 2.1% year-on-year. Shanghai Industrial Environment's net profit attributable to shareholders was RMB 344 million, a year-on-year increase of 7.1%, indicating strong resilience in the solid waste and water treatment sectors.
Highlights in Consumer and Health Sectors
The consumer sector achieved revenue and net profit growth of 11% and 26% year-on-year, reaching HKD 1.9 billion and HKD 433 million, respectively. The Nanyang Tobacco business performed strongly, generating revenue of HKD 1.273 billion, a year-on-year increase of 16.4%, and a net profit of HKD 337 million, a year-on-year increase of 20%, with sales increasing by 31% year-on-year and successful expansion into overseas markets. The health sector's net profit was HKD 141 million, a year-on-year increase of 118.4%, mainly due to Shanghai Pharmaceuticals confirming one-time gains.
Improved Financial Condition and Positive Dividend Policy
The company raised funds by selling Yuefeng Environmental, part of which was used to repay bank loans, reducing interest-bearing liabilities to HKD 58.513 billion and lowering the debt-to-asset ratio to 51.5%, with financial expenses decreasing by 15% year-on-year. In terms of dividends, the company plans to distribute HKD 0.42 per share in the mid-2025 period, totaling HKD 457 million, which is the same as the same period last year, but the payout ratio has increased from 38% to 43.8%
