Skip navigation
Newswire

UPDATE 1-Car sales surge boosts Zhejiang Expressway profit

(Adds details, updates share price)

HONG KONG, Aug 19 (Reuters) - Chinese toll road operator Zhejiang Expressway Co Ltd said on Tuesday its first-half net profit grew by 10.3 percent, spurred by strong sales of passenger cars in the country.

The firm, based in Zhejiang province near the booming city of Shanghai, said that traffic on some routes was less than previous years due to SARS-related travel controls, but said business had bounced back quickly after the outbreak was contained.

"We already see stronger-than-usual growth in traffic volumes on the two expressways operated by the group, indicating a return to the robust economic growth for Zhejiang province in the second half of the year," the firm said.

The firm reported net profit of 492 million yuan (US$59.45 million) in the six months to June 30 compared with 446 million yuan in the same period last year.

Car production in China more than doubled in the first half of 2003 and is expected to pass the two million mark for the year.

Zheijiang's Hong Kong-listed shares ended unchanged at HK$3.75. Through Monday's close, the stock had gained 30.4 percent in the past three months and have more than trebled in the last three years.

Chairman Geng Xiaoping said the firm was in talks on new investments and required a return on equity of 12 percent, but declined to give further details.

He said the firm was also due to complete the first stage of a five billion yuan project to widen its main Shanghai-Hangzhou-Ningbo highway to eight lanes from four in October 2003.

Geng said a maximum capacity of 100,000 vehicles could travel on an eight-lane highway in a 24-hour period. Currently, around 38,000 vehicles use the road daily.

The firm said it was studying to what extent the construction of the Hangzhou Bay Bridge, due to be completed in 2008, will divert traffic away from its existing highways.

The company also said it expected to see more heavy truck traffic on its routes as ports in Shanghai and Ningbo expand.

The firm proposed an interim dividend of 0.04 yuan per share, the same as the first half of 2002.

Rival Jiangsu Expressway Co Ltd reported last week a 14 percent increase in net profit.

($1=8.276 Yuan)