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]Morgan upgrades Guangshen Railway to HK$6.35
Morgan Stanley lifted its target price for
Guangshen Railway (00525) to HK$6.35 from HK$4.36, and upgraded its rating to "overweight"
from "equal-weight".
  The research house lifted its 2018/19 estimates by 67% and 65%. It found valuation more
justified at 16.5x 2018 P/E. Morgan said the earnings upgrades factored in: (1) potential
land asset disposal gains (Rmb550m and Rmb500m), and (2) potential rail ticket price hikes
(10% p.a.) on long-distance train services in 2018 and 2019.
  Given the government's concerns about social inflation, it has kept China's passenger
rail ticket prices fixed for 22 years. While the market has been expecting a price hike
led by railway industry reform in recent years, Morgan believes real execution will be a 
positive surprise.

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