China, as the world’s largest logistics market would not be where it is today without the proper infrastructure in place. In order to transport goods efficiently, the industry needs well-functioning infrastructure. The country’s leaders are aware of this and have responded by allocating resources for continual improvement.
That is why China’s State Council has given priority to more than 20 cities in nine regions for an infrastructure upgrade in the next two years, with improvements ranging from expressways to airports to sea ports.
Aiming at improving operational efficiency, this decision is also to establish a wider network – on top of the already existing huge network – of expressways and roads to meet the increasing needs for both commuters and businesses.
This move to focus on infrastructure development has been received very well, especially since logistics facilities are in very high demand. In a recent survey involving 250 importers conducted by, PricewaterhouseCoopers, one of the most important considerations when choosing a location to penetrate into China is the availability of infrastructure.
But logistics infrastructure does not end after the construction. In order to truly be the backbone of the logistics market, it has to be operated and maintained by companies that are adept at doing so. One of such infrastructure companies in China is Zhejiang Expressway Co., Ltd.
Zhejiang – Investor, Developer, and Operator
Established in 1997, Zhejiang Expressway Co., Ltd. is regarded by the Zhejiang Provincial Government as its main enterprise for investment, development, operation, maintenance and management of high-grade roads in Zhejiang Province.
The company and its subsidiaries have concession rights to operate the Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway for a period of 30 years, as well as the Jinhua Section of the Ningbo-Jinhua Expressway for a period of 25 years.
Zhejiang Expressway and its subsidiaries also carry out certain ancillary businesses such as automobile servicing, operation of gas stations and billboard advertising along expressways, as well as the securities business.
Investment in Infrastructure Can Do No Wrong
The decision to invest in infrastructure is the right one since it is one of the things that modern economies cannot do without. InvestAsian believes that Zhejiang is the right choice for your portfolio due to many reasons.
First of all, it is one of the leading performers in the industry. Even though China experienced an economic downturn which resulted in man local companies being worse off, Zhejiang is on its way to a year of higher revenue and profit.
Its latest quarterly report shows that the company has experienced a tremendous increase in its sales – a 39.5% YoY increase. It is also estimating an increase in its net profit margin.
Secondly, the company provides great returns for its shareholders. Boasting a very impressive ROE of 14.25% and an ROI of 16.28%, Zhejiang continuously rewards its investors handsomely.
Thirdly, the company is a selling at a great price as of this moment. With a P/E of 9.47, a dividend yield of 5.30%, and a price of 7.70 HKD per share, Zhejiang is a recommended buy.