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Guangshen Railway Co Ltd ADR GSHHY

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Morningstar’s Analysis

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5-Star Price

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Economic Moat

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Capital Allocation

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Guangshen’s Net Loss in 2020 Well Expected; Traffic Recovery Is Underway

Jennifer Song Senior Equity Analyst

Analyst Note

| Jennifer Song |

We lower our fair value estimate of Guangshen Railway to HKD 3.60 per share from HKD 3.80, to reflect a prolonged pandemic impact. We expect the government’s “stay locally” during Lunar New Year policy to hold back the travel demand temporarily, and we extend our net loss estimate for first-quarter 2020. Guangshen has recently started to sell “no seat” ticket recently, which we view is a positive sign indicating rising demand. We expect full-year passenger traffic to recover to 65% of the prepandemic 2019 level. This is 5% lower compared with our previous assumption, and we cut our full-year 2021 net profit forecast to CNY 129 million from CNY 281 million, while maintaining our view for a full recovery of passenger traffic to prepandemic levels by 2023.

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Company Profile

Business Description

Guangshen Railway is one of the key railway operators in southern China's relative prosperous Guangdong province. It provides both passenger and freight transportation through its wholly owned Guangzhou-Shenzhen intercity express rail line and Guangzhou-Pingshi rail line, as well as a few long-distance passenger lines. Guangshen also provides high-speed rail operation services to its parent China Railway Guangzhou Group, and operates the Kowloon-Guangzhou through trains in cooperation with MTR, a Hong Kong-listed railway operator. And the state-owned China Railway Corporate controls 37.12% of Guangshen.

Contact
No. 1052, Heping Road, Guangdong Province
Shenzhen, 518010, China, People's Republic of
T +86 75525588150
Sector Industrials
Industry Railroads
Most Recent Earnings Dec 31, 2012
Fiscal Year End Dec 31, 2021
Stock Type
Employees 41,286

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