Zhongtai's September strategy for the public rail and port chain: Dividend assets remain the direction for fund allocation.

Zhongtai released a research report pointing out that dividend assets are still the direction of fund allocation. In the environment of volatile adjustments, quality targets with relatively stable operations and a focus on shareholder returns are expected to continue to attract market attention. For individual stocks, in the highway sector, Shandong Hi-speed with good development in road and bridge main business and stable dividend policy is recommended, as well as Jiangsu Expressway, etc.; in the railway sector, Beijing-Shanghai High Speed Railway is recommended; in the port sector, QINGDAO PORT with outstanding hub port position and continuous integration dividends is recommended, as well as Tangshan Port Group; in the bulk supply chain sector, Xiamen ITG Group Corp., Ltd. with low current valuation and potential for future profit improvement is recommended. Zhongtai's main points are as follows: August performance review: Sector gains lag behind the Shanghai and Shenzhen 300. In August 2024, the Transportation (Shenwan) index fell by 4.8%, lagging behind the Shanghai and Shenzhen 300 index by 1.3 percentage points; SW high-speed highway sector Shandong Hi-speed (6.7%) saw larger gains; SW railway transport sector Ningxia Western Venture Industrial (-0.2%) had smaller losses; SW port sector QINGDAO PORT (-0.3%) had smaller losses; SW raw material supply chain service sector GEN-S POWER Group (9.5%) had larger gains. 2024 H1 operating conditions: 1) Highway: toll revenue is expected to be under pressure. Due to factors such as adverse weather, free policies, and insufficient domestic effective demand, combined with the high base of vehicle flow after the control of the epidemic was relaxed in H1 2023, toll revenue in the sector is expected to decline year-on-year in H1 2024. The operational performance of listed toll road projects will also be affected by factors such as location, changes in competitive or synergistic road networks, project self-expansion or reconstruction, and adjacent or parallel road expansion. In H1 2024, the toll revenue year-on-year growth of Jiangsu Expressway, Jiangxi Ganyue Expressway, Sichuan Expressway, Guangdong Expressway, Shenzhen Expressway Corporation, Anhui Expressway, Shandong Hi-speed are -0.2%, -1.9%, -4.6%, -6.4%, -8.5%. -10.3%. Looking ahead to the second half of the year, with the increase in holiday travel and economic development, highway traffic flow is expected to increase. 2) Railway: Passenger transportation is better than freight. According to data from the National Railway Administration, in H1 2024, the national railway accumulated passenger turnover was 7779.52 billion passenger kilometers, a year-on-year increase of 14.1%; the accumulated total freight turnover was 17471.10 billion ton-kilometers, a year-on-year decrease of 2.9%. The performance of passenger and freight transportation is differentiated, with passenger transportation profitability growing faster. In H1 2024, Guangshen Railway's net profit attributable to the parent company increased by 34.7% year-on-year; Beijing-Shanghai High Speed Railway's net profit attributable to the parent company increased by 23.8% year-on-year; Daqin Railway's net profit attributable to the parent company decreased by 22.2% year-on-year. Looking ahead to the second half of the year, with the densification of the high-speed railway network and the increase in railway travel demand, passenger volume is expected to continue to grow; for freight transportation, the changing demand for transport of bulk commodities such as coal still needs to be monitored. 3) Ports: Container throughput growth rate is faster. According to data from the Ministry of Transport, in H1 2024, the national ports handled a cargo throughput of 8.56 billion tons, a year-on-year increase of 4.6%; container throughput of 16,184 million TEU, a year-on-year increase of 8.5%. The performance of listed companies is affected by their business structure, cargo structure, and hinterland development. In H1 2024, QINGDAO PORT's net profit attributable to the parent company increased by 3.1% year-on-year; Tangshan Port Group's net profit attributable to the parent company increased by 7.2% year-on-year. Looking ahead to the second half of the year, the total cargo throughput of ports is expected to continue to grow, and the growth rate of container throughput is expected to remain higher than that of bulk cargo. September investment recommendations: Dividend assets are still the direction of fund allocation. In the environment of volatile adjustments, quality targets with relatively stable operations and a focus on shareholder returns are expected to continue to attract market attention. In the highway sector, Shandong Hi-speed with good development in road and bridge main business and stable dividend policy is recommended, as well as China Merchants Expressway Network & Technology Holdings, Jiangsu Expressway, Guangdong Expressway, Shenzhen Expressway Corporation, Anhui Expressway, Sichuan Expressway; in the railway sector, Beijing-Shanghai High Speed Railway, Guangshen Railway, Daqin Railway are recommended; in the port sector, QINGDAO PORT with outstanding hub port position and continuous integration dividends is recommended, as well as Tangshan Port Group; in the bulk supply chain sector, Xiamen ITG Group Corp., Ltd., and Xi are recommended as the valuation is relatively low, and future profit capabilities are expected to increase.Amen Xiangyu.Risk warning: risks of macroeconomic downturn; risks of industry policy adjustments; geopolitical risks; risks of third-party data credibility; risks of calculation errors; risks of outdated information data updates.