Jiangsu Expressway has reported 9M26 revenue of RMB15.4bn (+18.6% YoY), an attributable NP of RMB3.85bn (+0.4% YoY), and a recurring NP of RMB3.81bn (+1.65% YoY). For 3Q26, revenue was RMB6.1bn (+70.7% YoY), the attributable NP was RMB1.35bn (-4.5% YoY), and the recurring NP was RMB1.32bn (-1.4% YoY). The decline in 3Q26 attributable NP mainly reflected higher amortization following the completion of new and expanded road sections, alongside a high prior-year base in non-recurring gains. Weaker market risk appetite has recently drawn significantly greater attention to dividend plays. The company’s A- and H-shares offer trailing-12-month dividend yields of 3.6% and 5.2%, respectively. Considering dividend yield appeal and the upside implied by our DCF valuations, we maintain HOLD on the A-share and BUY on the H-share.
Dividend timing lifts 1Q26 earnings; modest pressure in 2Q–3Q
Toll revenue grew by 3.95%/7.61%/3.73% YoY for 1Q–3Q26, respectively. Revenue from the core Shanghai–Nanjing Expressway, which accounts for approximately 55% of total toll revenue, changed by +0.26%/+2.63%/-2.60% YoY. The total gross profit changed by -0.1%/+6.6%/-1.4%. Finance expenses fell by 11%/6%/2% YoY across the three quarters, benefiting from lower market interest rates. Income tax expenses changed by +17%/+56%/-18% YoY, contributing to quarterly earnings volatility. Together, these factors resulted in attributable NP growth of +12.8%/-6.2%/-4.5% YoY in 1Q–3Q26. The 1Q26 earnings increase benefited from the timing of Bank of Jiangsu’s interim dividend (recognized in 1Q this year versus 4Q in the prior year).
Earnings forecast and valuation
We forecast 2026/2027/2028 attributable NP of RMB4.76bn/4.84bn/4.92bn, representing YoY growth of 4%/2%/2%. Our DCF valuation uses A-share/H-share WACCs of 4.3%/5.3% (equity IRRs of 6.9%/8.8% and debt IRRs of 2.23%/2.23%), deriving our target prices of RMB14.20/HKD12.50.
Upside risks: greater traffic volume than we expect; lower capex; rising tolls. Downside risks: high oil prices suppressing travel demand; greater-than-expected traffic diversion; higher-than-expected capital expenditure; toll rate reduction; impairment of financial assets and real estate business.