China Merchant Pacific (CMHP), a subsidiary of China Merchant Holdings, the China state-owned enterprise, acquires another expressway, a day before they announces their latest quarter results.
For my past articles on CMHP, you can view them [here]
To date, CMHP now owns 4 toll roads: Guihuang, Guiliu, Yongtaiwen (YTW) and now Beilun (BL).
Beilun will likely be funded by debts.
The quarterly results shows that Guihuang have falling traffic. Guiliu and Yongtaiwen have been stable.
Leveraged infrastructure play
The thing that people notice when glancing at the balance sheet is that CMHP have quite a lot of debts. Like most infrastructure and utility stocks, it is not uncommon to see 50% debt to asset ratio.
CMHP’s debt before the acquisition of Beilun was pretty good. They funded a HKD$2.7 bil purchase of YTW with part debts and part cash (they were net cash).
A caveat is that ...
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