Southwest Securities has released a research report projecting that Shanghai Industrial Holdings (00363) will achieve revenues of HKD 21.48 billion, HKD 22.17 billion, and HKD 22.89 billion for the years 2026 to 2028, respectively. Net profit attributable to shareholders is forecasted at HKD 2.13 billion, HKD 2.21 billion, and HKD 2.26 billion for the same period, with earnings per share (EPS) estimated at HKD 1.96, HKD 2.03, and HKD 2.08. The brokerage firm views the company's medium to long-term performance as stable, supported by strong dividend distributions, and recommends that investors maintain their focus on the stock.
Key points from the report are as follows:
The company reported its 2025 financial results, with annual revenue reaching HKD 20.832 billion and a net profit of HKD 2.02 billion. A final dividend of 50 HK cents per share has been proposed, along with a special dividend of 20 HK cents per share. Combined with an interim dividend of 42 HK cents per share already distributed within the year, the total dividend for 2025 amounts to 112 HK cents per share, up from 94 HK cents per share in 2024.
Infrastructure and environmental protection remain the primary sources of profit. The company's three toll roads reported growth in both traffic volume and toll revenue for 2025, contributing a combined net profit of HKD 1.053 billion to shareholders. Expansion plans for the Beijing-Shanghai Expressway (Shanghai section) and the Shanghai-Kunming Expressway (Shanghai section) are currently under active discussion and coordination with relevant government authorities. The water and solid waste businesses also demonstrated steady growth, with operational scale continuing to expand. SIIC Environment achieved a net profit attributable to shareholders of RMB 610 million, a year-on-year increase of 0.9%, while Central Water reported a net profit of HKD 295 million, up 5.5% compared to the previous year. Combined profits from the infrastructure and environmental protection segments totaled HKD 1.801 billion, accounting for approximately 93.4% of the company's net profit. Excluding one-time gains from the sale of Hangzhou Bay Bridge equity in 2024, overall business operations remained stable.
The consumer goods segment also showed positive development, contributing HKD 756 million in profit for the year, an increase of 17.5% compared to the previous year, and representing about 39.2% of the company's net profit. Despite macroeconomic pressures, intensified competition in the consumer goods market, and rising cost uncertainties in 2025, Nanyang Tobacco comprehensively advanced new product development and improvements to existing products, adapting proactively to market changes and achieving steady sales growth throughout the year.
The company maintains healthy cash flow and a high dividend payout ratio. In 2025, following the successful privatization of Yuefeng Environment and the early redemption of exchangeable bonds, the company recovered approximately HKD 4.029 billion in cash. Additionally, SIIC Yangtze River Delta Ecological Development Co., Ltd., in which the company holds a 50% equity stake, sold all of its shares in Shanghai Pharmaceutical Group and Shanghai Kangqiang Environment for approximately RMB 6.72 billion and RMB 6.587 billion, respectively, resulting in a net cash inflow of about RMB 5.2 billion. These transactions further strengthened the company's cash position. Supported by strong cash flow generation from its operations, the company has consistently maintained stable annual dividend payments. The total dividend for 2025 was HKD 1.12 per share, representing a payout ratio of 60.28%. Based on the closing share price on April 16, 2026, the dividend yield reached 7.9%.
Potential risks include macroeconomic fluctuations, a slowdown in consumer recovery, underperformance in real estate improvement, and changes in toll road policies.
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