CICC has initiated coverage on ANHUI EXPRESSWAY (00995), assigning an "Outperform" rating with a target price of HK$15.12, implying an 8% upside from the current level. The company's toll roads are strategically located at provincial borders, connecting eastern and western regions as well as southern and northern areas, with strong demand from the local automotive industry and regional passenger/freight transport.

ANHUI EXPRESSWAY's core assets have been operational for an extended period, boasting an average gross margin of 59.5% from 2014 to 2024, with long toll collection periods post-expansion. In the near term, the acquisition of the Anhui sections of Fuzhou and Sixu Expressways, along with the completion of the Xuanguang and Guangci expansion projects, is expected to drive profit growth. Additionally, the 7% stake acquisition in Shandong Hi-Speed is projected to contribute approximately RMB 300 million in investment income by 2026.

Over the medium to long term, the expansion of Gaojie Expressway and participation in new toll road projects highlight sustained growth potential. The company plans to maintain a dividend payout ratio of no less than 60% from 2025 to 2027. Based on CICC's estimates, the current H-share price implies 2025-26 dividend yields of 5.4% and 6%, ranking among the highest in the H-share expressway sector.

CICC forecasts 2025/26 net profits of RMB 1.97 billion and RMB 2.17 billion, respectively, with a 14% CAGR from 2024 to 2026. Given the sector's average H-share dividend yield of 5.9%, ANHUI EXPRESSWAY's high-quality assets and growth prospects warrant a valuation premium. The target price of HK$15.12 is based on a 5% dividend yield, translating to 2025/26 P/E multiples of 12x and 10.8x.