The Zhejiang provincial government owns two-thirds of Zhejiang Expressway Company Limited, a public corporation that invests in and operates toll roads within this prosperous province of eastern China. Under Jianhu Luo’s leadership, Zhejiang Expressway’s Profitable Growth rank has fallen to below average. Learn more at: http://becomeabetterinvestor.net/blog/the-road-to-riches-isnt-always-straight/

1. Presented by: Dr. Andrew Stotz, CFA
Zhejiang Expressway
Company Limited

2. 216 October 2016
Revenue breakdown, by business 2015
Zhejiang Expressway Company Limited (576 HK)
Sources: A. Stotz Investment Research, company data, Thomson Reuters
 ZJEX is an infrastructure company primarily engaged in development and operation of
highways
 The company owns the 248km Shanghai-Hangzhou-Ningbo Expressway, which accounts
for the majority of its toll revenue. It also operates the 142km Shangsan, 70km Ningbo-
Jinhua and 117km Hanghui expressways. The latest acquisition of Huihang Exy will bring the
total length of expressways managed by ZJEX from around 577km to 664km
 Almost 50% of the revenue comes from its securities brokerage, derived from the
company’s 71% stake in Zheshang Securities. Securities business noted a more than 100%
increase in profits YoY in 2015, but that growth is expected to cool down due to the less
positive stock market sentiment and the company’s primary focus on toll roads. Zheshang
Securities plans to go public in the A-share market in 2H16
 Expressway-related operations include automobile servicing, petrol stations, food sales
and advertising, which combined account for the remaining 14% of the revenue
Tolls 40%Securities 46% Expressways related operations 14%
Stock information:
Name: Zhejiang Expressway
Co. Ltd. Class H
Ticker: 576 HK
Price (HKD): 8.39
Mcap: US$4,724m
3MADTO: US$5m
Beta: 1.3x
Sector: Industrials
Industry: Transportation
Major shareholders:
67% Zhejiang
Communications Investment
Group Co., Ltd.
3% BlackRock Fund Advisors
30% Free float
Background: Zhejiang Expressway Company Limited is 67% owned by the
Zhejiang Communications Investment Group, which is itself 100% owned
by the Zhejiang provincial government, to invest and operate toll-road
assets within this prosperous province. The group also has exposure to
securities brokerage business, with its 71% holding in Zheshang Securities.
50
70
90
110
130
150
170
5
7
9
11
13
15
Oct-13 Jul-14 Apr-15 Jan-16 Oct-16
576 HK (LHS)
Price relative to local index
(HKD) (%)

3. 316 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
Background: Zhejiang Expressway Company Limited is
67% owned by the Zhejiang Communications Investment
Group,
which is itself 100% owned by the Zhejiang provincial
government, to invest and operate toll-road assets within
this prosperous province.
The group also has exposure to securities brokerage
business, with its 71% holding in Zheshang Securities.
Zhejiang Expressway Company Limited (576 HK)

4. 416 October 2016
50
70
90
110
130
150
170
5
7
9
11
13
15
Oct-13 Jul-14 Apr-15 Jan-16 Oct-16
576 HK (LHS)
Price relative to local index
(HKD) (%)
Stock information:
Name: Zhejiang Expressway Co.
Ltd. Class H
Ticker: 576 HK
Price (HKD): 8.39
Mcap: US$4,724m
3MADTO: US$5m
Beta: 1.3x
Sector: Industrials
Industry: Transportation
Major shareholders:
67% Zhejiang Communications
Investment Group Co., Ltd.
3% BlackRock Fund Advisors
30% Free float
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
Zhejiang Expressway Company Limited (576 HK)

5. 516 October 2016
Revenue breakdown, by business 2015
Zhejiang Expressway Company Limited (576 HK)
Sources: A. Stotz Investment Research, company data, Thomson Reuters
 ZJEX is an infrastructure company primarily engaged in development and operation of
highways
 The company owns the 248km Shanghai-Hangzhou-Ningbo Expressway, which accounts
for the majority of its toll revenue. It also operates the 142km Shangsan, 70km Ningbo-
Jinhua and 117km Hanghui expressways. The latest acquisition of Huihang Exy will bring the
total length of expressways managed by ZJEX from around 577km to 664km
 Almost 50% of the revenue comes from its securities brokerage, derived from the
company’s 71% stake in Zheshang Securities. Securities business noted a more than 100%
increase in profits YoY in 2015, but that growth is expected to cool down due to the less
positive stock market sentiment and the company’s primary focus on toll roads. Zheshang
Securities plans to go public in the A-share market in 2H16
 Expressway-related operations include automobile servicing, petrol stations, food sales
and advertising, which combined account for the remaining 14% of the revenue
Tolls 40%Securities 46% Expressways related operations 14%
Stock information:
Name: Zhejiang Expressway
Co. Ltd. Class H
Ticker: 576 HK
Price (HKD): 8.39
Mcap: US$4,724m
3MADTO: US$5m
Beta: 1.3x
Sector: Industrials
Industry: Transportation
Major shareholders:
67% Zhejiang
Communications Investment
Group Co., Ltd.
3% BlackRock Fund Advisors
30% Free float
Background: Zhejiang Expressway Company Limited is 67% owned by the
Zhejiang Communications Investment Group, which is itself 100% owned
by the Zhejiang provincial government, to invest and operate toll-road
assets within this prosperous province. The group also has exposure to
securities brokerage business, with its 71% holding in Zheshang Securities.
50
70
90
110
130
150
170
5
7
9
11
13
15
Oct-13 Jul-14 Apr-15 Jan-16 Oct-16
576 HK (LHS)
Price relative to local index
(HKD) (%)

6. 616 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
 ZJEX is an infrastructure company primarily
engaged in development and operation of
highways
Zhejiang Expressway Company Limited (576 HK)

7. 716 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
 The company owns the 248km Shanghai-
Hangzhou-Ningbo Expressway, which accounts
for the majority of its toll revenue
 It also operates the 142km Shangsan, 70km
Ningbo-Jinhua and 117km Hanghui expressways
Zhejiang Expressway Company Limited (576 HK)

8. 816 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
 The latest acquisition of Huihang Exy will bring
the total length of expressways managed by ZJEX
from around 577km to 664km
 Almost 50% of the revenue comes from its
securities brokerage, derived from the company’s
71% stake in Zheshang Securities
Zhejiang Expressway Company Limited (576 HK)

9. 916 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
 Securities business noted a more than 100%
increase in profits YoY in 2015,
 but that growth is expected to cool down due to the
less positive stock market sentiment and the
company’s primary focus on toll roads
 Zheshang Securities plans to go public in the A-share
market in 2H16
Zhejiang Expressway Company Limited (576 HK)

10. 1016 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
 Expressway-related operations include
automobile servicing, petrol stations, food sales
and advertising, which combined account for the
remaining 14% of the revenue
Zhejiang Expressway Company Limited (576 HK)

11. 1116 October 2016
50
70
90
110
130
150
170
5
7
9
11
13
15
Oct-13 Jul-14 Apr-15 Jan-16 Oct-16
576 HK (LHS)
Price relative to local index
(HKD) (%)
Revenue breakdown, by business 2015
Zhejiang Expressway Company Limited (576 HK)
Sources: A. Stotz Investment Research, company data, Thomson Reuters
 ZJEX is an infrastructure company primarily engaged in development and operation of
highways
 The company owns the 248km Shanghai-Hangzhou-Ningbo Expressway, which accounts
for the majority of its toll revenue. It also operates the 142km Shangsan, 70km Ningbo-
Jinhua and 117km Hanghui expressways. The latest acquisition of Huihang Exy will bring the
total length of expressways managed by ZJEX from around 577km to 664km
 Almost 50% of the revenue comes from its securities brokerage, derived from the
company’s 71% stake in Zheshang Securities. Securities business noted a more than 100%
increase in profits YoY in 2015, but that growth is expected to cool down due to the less
positive stock market sentiment and the company’s primary focus on toll roads. Zheshang
Securities plans to go public in the A-share market in 2H16
 Expressway-related operations include automobile servicing, petrol stations, food sales
and advertising, which combined account for the remaining 14% of the revenue
Tolls 40%Securities 46% Expressways related operations 14%
Stock information:
Name: Zhejiang Expressway
Co. Ltd. Class H
Ticker: 576 HK
Price (HKD): 8.39
Mcap: US$4,724m
3MADTO: US$5m
Beta: 1.3x
Sector: Industrials
Industry: Transportation
Major shareholders:
67% Zhejiang
Communications Investment
Group Co., Ltd.
3% BlackRock Fund Advisors
30% Free float
Background: Zhejiang Expressway Company Limited is 67% owned by the
Zhejiang Communications Investment Group, which is itself 100% owned
by the Zhejiang provincial government, to invest and operate toll-road
assets within this prosperous province. The group also has exposure to
securities brokerage business, with its 71% holding in Zheshang Securities.

12. 1216 October 2016
Sources: A. Stotz Investment Research, Bloomberg, company data, FactSet, Thomson Reuters
Revenue breakdown, by business 2015
Securities 46% Tolls 40%
Expressways related
operations 14%

14. 1416 October 2016
ZJEX: Leadership
Sources: A. Stotz Investment Research, company data, FactSet
Chairman
General
Manager
2012 2013 2014 2015 Past 12 months
Xiaozhang Zhan
Jun 2012 – Present
Jianhu Luo
Jun 2012 – Present

15. 1516 October 2016
'12 '13 '14 '15 PTM
4 3 4 4 6
'12 '13 '14 '15 PTM '12 '13 '14 '15 PTM
4 3 4 4 5 7 5 4 3 6
'12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM
10 10 10 10 10 1 1 1 1 1 7 3 2 1 4 9 4 7 6 7
Benchmarked against 1,400 large Industrials companies worldwide.
Profitable Growth
Asset utilization Profit margin Sales growth Margin change
Profitability Growth
CEO, 2012 – Present
Jianhu Luo
Source: A. Stotz Investment Research. Notes: 1 = top ranking and 10 = worst. Most recent year’s data is based on the past 12 months (PTM) of published data.
Profitable Growth has
fallen to below average
Only ranks better than
560 of 1,400 large
Industrials companies
ZJEX: A. Stotz Profitable Growth

16. 1616 October 2016
'12 '13 '14 '15 PTM
4 3 4 4 6
'12 '13 '14 '15 PTM '12 '13 '14 '15 PTM
4 3 4 4 5 7 5 4 3 6
'12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM
10 10 10 10 10 1 1 1 1 1 7 3 2 1 4 9 4 7 6 7
Benchmarked against 1,400 large Industrials companies worldwide.
Profitable Growth
Asset utilization Profit margin Sales growth Margin change
Profitability Growth
Source: A. Stotz Investment Research. Notes: 1 = top ranking and 10 = worst. Most recent year’s data is based on the past 12 months (PTM) of published data.
Profitable Growth has
fallen to below average
Only ranks better than
560 of 1,400 large
Industrials companies
Profitability has fallen to
average, Growth was in a
good trend but not in PTM
ZJEX: A. Stotz Profitable Growth
CEO, 2012 – Present
Jianhu Luo

17. 1716 October 2016
'12 '13 '14 '15 PTM
4 3 4 4 6
'12 '13 '14 '15 PTM '12 '13 '14 '15 PTM
4 3 4 4 5 7 5 4 3 6
'12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM '12 '13 '14 '15 PTM
10 10 10 10 10 1 1 1 1 1 7 3 2 1 4 9 4 7 6 7
Benchmarked against 1,400 large Industrials companies worldwide.
Profitable Growth
Asset utilization Profit margin Sales growth Margin change
Profitability Growth
Source: A. Stotz Investment Research. Notes: 1 = top ranking and 10 = worst. Most recent year’s data is based on the past 12 months (PTM) of published data.
Profitable Growth has
fallen to below average
Only ranks better than
560 of 1,400 large
Industrials companies
Profitability has fallen to
average, Growth was in a
good trend but not in PTM
Low utilization but World
Class Profit margin!
Sales growth and Margin
change are both dragging
on Growth
ZJEX: A. Stotz Profitable Growth
CEO, 2012 – Present
Jianhu Luo

18. 1816 October 2016
 Do YOU want to see the Profitable Growth rank
for a company in YOUR portfolio?
 Leave a comment below with company name
and country of listing…and I’ll post it if I have it