Main points of investment:
Event: Shanghai Hong Kong Group released its annual report for 2021, with operating income of 34.3 billion yuan, an increase of 31% over the same period last year, and net profit of 14.7 billion yuan, up 77% from the same period last year. The non-return net profit was 13.7 billion yuan, an increase of 81% over the same period last year. Basic earnings per share is 0.63 yuan, cash dividend of 1.90 yuan (including tax) is distributed to all shareholders for every 10 shares, and a total dividend of 4.4 billion yuan is proposed, accounting for 30% of the net profit returned to the mother.
The overall performance of the annual report exceeded the performance forecast by 200 million yuan. According to the company announcement, the increase in operating income is mainly due to the year-on-year growth of container throughput at home port, the growth of property sales of subsidiary Ruitai and Ruixiang, and the growth of subsidiary Jinjiang shipping revenue.
The company's main port business has achieved great growth, and the increase in revenue per box or the decrease in cost per box is expected to further contribute to profits. The revenue of container business was 14.9 billion yuan, an increase of 11.7% over the same period last year. Volume: in 2021, the container throughput of Shanghai Port Group was 47.033 million TEUs, an increase of 8.1% over the same period last year, and the cargo throughput was 540 million tons, an increase of 5.7% over the same period last year. Price: the consolidation boom exceeded expectations, the proportion of heavy containers in the container throughput structure increased, the port preference decreased, and the revenue per container was 317 yuan / TEU, an increase of 3% over the same period last year. Affected by the rise in epidemic prevention costs, the cost per container was 165 yuan / TEU, an increase of 2% over the same period last year. Container gross profit margin is 47.8%, up 0.7pct from the previous year, and there is still enough room for more than 50% before 2019, and single container revenue is expected to continue to rise. Based on 47.033 million TEUs, the charge per container increases by 30-40 yuan / TEU, contributing to the net profit of 10.6-1.41 billion. If the subsequent epidemic ends, the cost of epidemic prevention returns to normal, assuming that the cost per container decreases by 13 yuan / TEU and returns to the pre-epidemic level, contributing 460 million of the net profit.
Subsidiary Jinjiang Shipping's net profit has increased significantly and is to be spun off and listed on the stock market. In 2021, Jinjiang shipping's operating income was 3.57 billion yuan, an increase of 58% over the same period last year, and its net profit was 390 million yuan, an increase of 23.3% over the same period last year. According to the motion of the Shanghai Hong Kong Group on planning the spin-off and listing of subsidiaries in January 2022, the company intends to plan the spin-off and listing of Jinjiang Shipping, which will not lead to the loss of control over Jinjiang Shipping and will not have a material impact on the continuous operation of other business sectors of the company.
The substantial increase in investment income is mainly due to the substantial increase in Orient Overseas's profits. The company's investment income in 2021 was 10.1 billion yuan, an increase of 190% over the same period last year. According to the company announcement, Orient Overseas returned to his mother with a net profit of 46 billion yuan, an increase of 655% over the same period last year. Shanghai Group accounts for 9.1% of its total equity, and its expected investment income is 4.2 billion yuan. The net profit of the Bank of Shanghai is 22 billion yuan, an increase of 6% over the same period last year. Shanghai Group accounts for 8.3% of its total equity, and its estimated investment income is 1.8 billion yuan. In March 2021, Postal Savings Bank of China's private increase led to a decline in the company's shareholding to 3.9%.
The performance is in line with expectations and the "buy" rating is reiterated. On March 25, the price of the box in the hinterland of Shanghai and Hong Kong was raised by 10% to pay attention to the improvement in the profits of the main business in the first quarter. Taking into account the price of the hinterland box landing, a small increase in 2022E-2023E return net profit of 156.6 yuan, 17.83 billion yuan (the original value of 153.8 yuan, 17.27 billion yuan). Maintain the segment valuation method with a target market capitalization of 281.1 billion, and Shanghai Group has enough room for valuation repair. Reiterate the "buy" rating.
Risk hint: the global economy continues to decline, the port rate headwind policy continues, and the shipping boom is lower than expected.