The performance of Shenzhen International ("Shenzhen International" or "Company") in 2021 is worse than we expected. Due to the good recovery of logistics and highway industries from the epidemic and the impact of sales of residential projects in 2020, the company achieved revenue of HK $18.5419 billion in 2021, a decrease of 4.7% from the same period last year, which is better than we expected. Affected by a higher-than-expected loss of HK $1.993 billion from Shenzhen Airlines, the company's net profit for shareholders fell 11.1 per cent to HK $3.5627 billion, or HK $1.60 per share. If we exclude the profit from the replacement of sea land and the disposal of Nanjing Xiba wharf before 2020, and the profit from the sale of joint land shares in 2021, the company's adjusted shareholder net profit rose 6.7% year-on-year, which is worse than we expected. In 2021, the company will pay a dividend of 52.7%, with a dividend of HK $0.828 per share.

We are cautiously optimistic about the long-term development of the company. As a result of the rapid expansion of the logistics park, we noticed that its net interest rate and asset turnover fell by 2021, but improved in 2021. With more mature operations and enhanced project optimization and screening capabilities, we expect Shenzhen International's return on net assets to increase steadily. At the same time, strong financial capacity and innovative financing tools enable Shenzhen International to pursue its long-term logistics strategy. The stable cash flow and capital recovery measures brought by the toll high-speed business should support the development of Shenzhen International Logistics Park.

In view of the positive outlook, we believe that the Shenzhen International valuation is attractive and focuses on "buying". In addition, management said that the potential re-planning of the South China Logistics Park and the sale of logistics park transformation projects may catalyze shareholder net profit. We lowered the daily price tag to HK $12.40 to reflect the poor performance of Shenzhen Airlines, which is equivalent to 9.7x / 8.0x / 50x 2022-2024.