The 2021 results of COSCO SHIPPING PORTS (the “Company”) are generally in line with our and market expectations. As throughput and terminal handling rates increased, the company's 2021 revenue increased 20.7% year-on-year to $1,208.3 million. The company's gross profit margin increased 3.7 percentage points year over year to 26.9%. Profit from joint ventures and associated companies increased 20.8% year over year. The company's shareholders' net profit rose 2.1% year-on-year to US$354.7 million, which is basically in line with our and market expectations. Excluding the impact of one-time earnings from asset sales and revaluations, the company's adjusted shareholders' net profit rose 23.6% year over year to US$332.5 million. In 2021, the company's dividend ratio remained at 40%, corresponding to a dividend of $0.04280 per share.

Terminal profitability recorded a significant increase in 2021, and at the same time, we expect the company's terminal network optimization and ongoing synergies to improve the company's return on net assets. As throughput, handling costs, and yard storage revenue rose sharply by 156.4% year over year to $88.835 million in profit from holding terminals. The optimization of the company's terminal mix is still ongoing. With the merger of container terminals in Tianjin in the future, the company's equity throughput growth is expected to accelerate. With continued terminal portfolio optimization and refined operation, we remain optimistic about the increase in the company's return on net assets.

We maintain our “Buy” investment rating and target price of HK$8.30. Given the good prospects for terminal operations, we think the company's current valuation is attractive. Our target price corresponds to 8.9 times, 8.1 times and 7.7 times the 2022-2024 price-earnings ratio, and 0.6 times, 0.6 times, and 0.5 times the 2022-2024 net price-earnings ratio.