How is the public transport sector in the Hong Kong stock market doing currently?

逍遥投资派 wrote a column · Apr 27, 2022 00:45

The 88th original article from Xiaoyao Investment.

Hong Kong Daily Research 39: Taking stock of the public transport sector.

How is the public transport sector in the Hong Kong stock market doing currently?

Summary

Overall, after experiencing last year's special circumstances, the public transport sector has seen some improvement in revenue, but has not fully recovered yet. Valuation remains high, and no suitable stocks have been selected.

Public transport sectorInvestment index: 0

The analysis process is as follows 👇

Today is April 27, 2022, Wednesday, before the Hong Kong stock market opens. Let's take stock of the public transport sector.

A total of 5 stocks, with market cap ranging from 0.178 billion to 261.6 billion, including 3 with market cap of over 2 billion. Let's focus on these 3 stocks.

$TRANSPORT INT'L (00062.HK)$Revenue decreased significantly by 24% in 2020, which is much better than I expected. In 2021, it recovered to 90% of the 2019 level. Operating profit has been declining since 2018, only rebounding by 4.7% in 2021. Net income saw a substantial increase in both 2017 and 2020, exceeding that year's operating profit.

In 2017, it was due to "non-operating special projects" reaching 0.44 billion, while in 2020, it was due to reaching 1.5 billion because of such projects. I would guess such a large amount is probably government subsidies. After a search, there are indeed related news.

Revenue in 2021 has not fully recovered. If we calculate based on the 2019 net income of 0.6 billion, the current pe ratio is 10 times, which still seems somewhat overestimated.

$MTR CORPORATION (00066.HK)$Revenue dropped significantly by 22% in 2020, recovering to nearly 90% of the 2019 level in 2021; operating profit turned into a loss in 2020, while net income declined from 2018 to 2020, recovering to 80% of the 2019 level in 2021.

After looking at the income statement, the 'impairment and provision' item has changed significantly, from an increase of 6.3 billion to a decrease of 9.1 billion, which has a very large impact on profits.

Even based on a profit of 12 billion in 2019, the PE ratio has reached 22, not resembling the valuation of a public utility stock.

$GUANGSHEN RAIL (00525.HK)$Revenue dropped significantly by 23% in 2020, recovered to 95% of 2019 in 2021, but operating profit in 2021 expanded losses, mainly due to operating expenses increasing from 19 billion in 2019 to 20.5 billion in 2021. Currently, dividends are suspended, there are no longer the benefits of being a utility stock, and it temporarily lacks investment value.

end

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