We talked over here a fair bit about Toll Road companies like MIIF and China Merchant Pacific having a good yield with a good moat. Well recent government actions have seem to reduce the moats pretty well.
Already MIIF’s Hua Nan Express way have indicated that they will have their toll reduced by the state government, so this is not just a risk analysis but a reality.
Recently China have declared 20 out of 365 days, during holidays these roads will all be toll free for passenger vehicles.
The sad thing is whenever we find something good, it seems to be taken away from us. China Merchant Pacific have indicated that perhaps 5% of their revenues will be hit by the holidays.
China government indicated that they will build more roads and expressway. But with all these moves I doubt many private companies will want to fund them.
...At the ...
