Industrial Chinese Toll Road Sector: Limited COVID-19 impact & earnings upside from service areas

UBS Evidence Lab conducted the third wave of the China Gas-station Convenience Store Consumer Survey of 3,105 drivers in 3 tier-1 cities and 14 provinces over 18-29 May 2020; c.77% of these drivers used service areas in past six months.

04 Aug 2020

China's daily expressway traffic

Source: Ministry of Transport

This combination line and column chart illustrates daily expressway traffic and year over year in China.

Limited impact from COVID-19 on service areas

UBS Evidence Lab conducted the third wave of the China Gas-station Convenience Store Consumer Survey of 3,105 drivers in three tier-1 cities and 14 provinces over 18-29 May 2020—around 77% of these drivers used service areas in the past six months. We observed limited impact from COVID-19 on service area visits, and we attribute this to robust recovery of expressway traffic in Q220. We see catalysts from provinces coming up with concession extension compensation schemes, after Guangxi's recent announced compensation plan.

Survey results suggested limited impact from COVID-19 on service areas

On average, frequency of using service areas and duration of stay are similar to the Jan 2018 survey. Average spending of Rmb47 per visit per person is 11% lower than the last survey, while spending at service areas in Jiangsu of Rmb50 is 6% higher than the last survey. Compared to the last survey, more drivers rated fast-food chain as an important factor to encourage them to spend more at service areas, and this was the most referred reason. Alternatively, fewer drivers rated easy parking as important as compared to the last survey.

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