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Guangshen Railway Co Ltd ADR GSHHY

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Morningstar’s Analysis

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Guangshen’s Weak Q3 Expected, Cut FVE to HKD 3.80 on Prolonged Impact From the Pandemic

Jennifer Song Equity Analyst

Analyst Note

| Jennifer Song |

Despite gradually improving traffic, Guangshen’s third quarter net loss expanded to CNY 503 million from CNY 152 million in the prior quarter. While the bump up in costs was expected, since maintenance activity had been deferred from the first half of the year, revenue lagged the nationwide recovery for other rail lines because travel restrictions between Hong Kong, Macao and the mainland remained for much of the third quarter. In addition, while we continue to believe reform is sorely needed in ticket prices, we now assume that this will be pushed back again to 2022-23. Although economic activities are on the mend in China, pandemic risks are lingering. As a result, we extend our net loss estimate for 2020 and lower our fair value estimate to HKD 3.80 per share from HKD 4.14.

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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.

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, 2020
Stock Type
Employees 41,761