Guotai Haitong: Maintain a "buy" rating on the highway industry. The sector is still a preferred option for transportation dividends.

Guotai Haitong has released a research report stating that it maintains a "hold" rating on the expressway industry. The cash flow and dividends of expressways are stable, and dividend stability remains a preferred option for transportation dividends. The optimization of industry policies is imminent and will significantly improve the industry's reinvestment risk. Listed expressway companies generally have expansion projects in progress, and expansion policies will have a significant impact on the return on reinvestment and long-term investment value. It is necessary to focus on studying the trend of national policies as several provinces with a large number of highway miles have successively introduced local expansion policies in recent years. Guotai Haitong's main points are as follows: Resilient demand for traffic, stable dividends, and dividend certainty Expressways have a resilient demand for traffic, with the impact of diversion from national roads in the second half of 2025 showing a significant decrease. By 2026, traffic volume is expected to resume steady growth, with excellent location ensuring growth certainty. The dividend yield depends on the dividend payout ratio and the PE valuation. The cash flow of expressways is stable with high dividend policies continuing. Even after the central valuation retreat in 2025, the dividend yield will rebound, making it still a preferred option for transportation dividends. Widespread consensus on regulatory revisions, policy optimization imminent The revision of the "Regulations on the Administration of Toll Roads" has been brewing for more than ten years, with broad consensus: extending the period for new road construction; allowing extensions for expansion projects; introducing new compensation mechanisms; and establishing a maintenance fee system for the next decade. The road network is still in the construction phase, with 34% of expressways reaching maturity and requiring continued support for reasonable returns and maintenance funds. The revision is imminent. The revision of the "Highway Law" will be an important signal. Various regions are experimenting with expansion projects, and attention should be paid to five major policy trends Listed expressway companies generally have expansion projects in progress, and expansion policies will significantly impact the return on reinvestment and long-term investment value. It is essential to focus on studying the national policy trends as several provinces with large highway miles have successively introduced local expansion policies in recent years. The industry has summarized and outlined five major trends in reshaping expansion, adjusting toll periods and standards, which may lead national policies. Risk warning: Economic fluctuations, industry policy risks, reinvestment risks, indirect effects of oil prices, and market style changes.