BUSCO advertising is one of the global top-quality outdoor advertisement resources. Statistics show that daily passenger load of Beijing buses accounts for 11mn, and daily trip mileage totals 4.56mn Km. On the one hand, the company is prominently advantageous in terms of passenger arrival and unit expense ratio; and on the other, local government’s clearing of outdoor advertisement makes BUSCO advertising more valuable.
Not considering its split-off assets, we forecast that the company’s EPS in 2008-2010E to be Rmb0.20, Rmb0.40 and Rmb0.60. Since potential growth deserves high valuation, given average sector P/E ratio of A-share at 25x, reasonable estimated value of the company is Rmb15 per share; supposing that WACC=10.0% and g=2%, reasonable valuation is Rmb16.05. rating of “Recommended” is hereby maintained.