Xinhua Far East Assigns AA- Issuer Credit Rating to Shandong Expressway Company Limited

Xinhua Far East Assigns AA- Issuer Credit Rating to Shandong Expressway Company Limited

April 04, 2007

    HONG KONG, April 4 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings ("Xinhua Far East") today
assigned an AA- issuer credit rating to Shandong Expressway
Company Limited ("Shandong Expressway" or
"the Company", SH A 600350).  The company's
rating outlook is stable. 

    (Logo: http://www.xprn.com.cn/xprn/sa/200611140926.gif
)

    The rating reflects the company's strong and stable
revenue growth arising from its toll collection activities,
boosted by Shandong Province's economic growth.  The rating
also considers the growth potential of the Ji'nan-Laiwu
Expressway, currently under construction, and the
Dezhou-Ji'nan section of the Beijing-Fuzhou Expressway,
which the company plans to acquire.  The rating also takes
into consideration the company's high profit margins,
stable and abundant cash flow and its conservative
financial profile.  On the downside, the business faces
concentration risks and its construction and acquisition of
toll roads have placed greater pressure on its debt levels.

    The company's core asset is the Ji'nan-Qingdao
Expressway, a vital link between the eastern coastal areas
and interior of Shandong Province.  With the local economy
developing quickly and its highway networks expanding,
expressway traffic has risen steadily.  The company
reported a 19.3% CAGR in toll fees from 2000 to 2006, which
has delivered higher revenues accordingly.

    While the Ji'nan-Qingdao Expressway has seen
significant growth in toll fees, its growth potential will
be limited once its traffic flows reach a point of
saturation.  As such, the Ji'nan-Laiwu Expressway, a
section of national trunk line, Beijing-Shanghai highway,
will be the company's new growth engine in the near future.
 The expressway is expected to be completed and open to
traffic at the end of 2007.  Additionally, the company is
planning to acquire the high-use Dezhou-Ji'nan section of
the Beijing-Fuzhou Expressway, where the Beijing-Fuzhou and
Beijing-Shanghai Expressways merge in Shandong.

    The company currently enjoys high profit margins and
stable cash flow, while possessing a relatively
conservative financial profile.  Its gross margin and EBIT
margin reached 59.5% and 52.8% respectively in 2006 and
will maintain high levels as major road maintenance work is
completed in 2007.  Its net operating cash flow has risen
consistently, reaching RMB1.1 billion in 2006, with the
company in a net cash position since listing on the
Shanghai Stock Exchange in 2002.

    On the downside, the construction of the Ji'nan-Laiwu
Expressway and the acquisition of the Dezhou-Jinan section
of the Beijing-Fuzhou Expressway will raise the company's
debt levels over the next one to two years, although we
expect these levels to be manageable.

    The company's focus on Shandong Province also heightens
its operational risks, making it sensitive to changes in the
local economy.  This is another factor which prevents it
from obtaining a higher rating at this time.  Moreover,
64.2% of its turnover in 2006 derived from toll fees on the
Ji'nan-Qingdao Expressway.  The construction and acquisition
of new toll roads should help diversify these risks to some
extent, however. 

    Shandong Expressway mainly invests in, operates and
manages roads, bridges and tunnels.  Its petroleum products
retail operations accounted for 15% of turnover in 2006.  As
of December 31, 2006, Shandong Provincial Expressway Group
Co Ltd was the company's largest shareholder, holding a
58.82% stake.

    Shandong Expressway is also a constituent of the
Xinhua/FTSE China 200 Index and, as of market close on
April 3, 2007, its total A-share market capitalization and
investable capitalization were RMB23.61 billion and RMB4.72
billion respectively. 

    For the rating report summary, please contact us via
[e-mail]. 


    Note to Editors:
    
    About Xinhua FTSE China 200 Index
    Xinhua FTSE China 200 Index is the large cap index in
the Xinhua FTSE China A Share Index Series and includes the
top 200 companies in China by market cap.  It is designed as
a tradable index and is calculated in real-time every 15
seconds.  For daily data and further information, see
http://www.xinhuaftse.com .

    About Xinhua Far East China Ratings
    Xinhua Far East China Ratings (Xinhua Far East) is a
pioneering venture in China that aims to rank credit risks
among corporations in China.  It is a strategic alliance
between Xinhua Finance (TSE Mothers: 9399), and Shanghai
Far East Credit Rating Co., Ltd.  Shanghai Far East became
a Xinhua Finance partner company in 2003 and the first
China member of The Association of Credit Rating Agencies
in Asia in December 2003.

    Capitalizing on the synergy between Xinhua Finance and
Shanghai Far East, Xinhua Far East's rating methodology and
process blend unique local market knowledge with
international rating standards.  Xinhua Far East is
committed to provide investors with independent, objective,
timely and forward-looking credit opinions on Chinese
companies.  It aims to help investors differentiate the
credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information
disclosures and transparency in China market.  For more
information, see http://www.xfn.com/creditrating .

    About Xinhua Finance Limited
    Xinhua Finance Limited is China's unchallenged leader
in financial information and media, and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY).  Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations.  Founded in November 1999, the
Company is headquartered in Shanghai with 20 news bureaus
and offices in 19 locations across Asia, Australia, North
America and Europe.  For more information, please visit
http://www.xinhuafinance.com . 

    About Shanghai Far East Credit Rating Co., Ltd
    Shanghai Far East Credit Rating Co., Ltd. is the first
and leading professional credit rating company with
comprehensive business coverage in China.  It is an
independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally
accepted standards for capital market in China.  The company
is a pioneer in conducting bond-rating business in China. 
For years, it has been authorized by the Shanghai branch of
the PBOC to undertake loan certificate credit rating.

    Since establishment, it has rated over 1,000 corporate
long-term bonds and commercial papers, based on the
principles of objectivity, fairness and independence.  The
company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three
consecutive years.  With its strong local presence and
knowledge, it provides investors with unique and the most
insightful credit opinion.  For more information, see
http://www.fareast-cr.com .


    For more information, please contact: 

    Hong Kong
     Joy Tsang
     Corporate & Investor Communications Director
     Xinhua Finance
     Tel:   [phone],
[phone]
     Email: [e-mail]

     Scott Zhang
     Tel:   [phone]
     Email: [e-mail]

    US
     Taylor Rafferty (IR/PR Contact in US)
     Ms. Ishviene Arora
     Tel:   [phone]
     Email: [e-mail]