1H22 performance is in line with our expectations
The company announced 1H22 results: revenue for the first half of the year was 705 million US dollars, up 24.7% year on year, 9.5% month on month; realized net profit of 177 million US dollars, corresponding to profit of 0.05 US dollars per share, up 0.8% year on year and 1.1% month on month, in line with our expectations; corresponding to 2Q22 revenue of 375 million US dollars, up 25.2% year on year, up 13.7% month on month, return mother net profit was 102 million US dollars, down 0.5% year on year, up 36.1% month on year.
The company's holding terminal performance was strong in the first half of the year. The overall profit of 1H22 and 2Q22 terminals changed +0.9%/-2.4% year on year. Among them, the profit of the holding terminal changed +45.1%/+35.6% year on year, mainly due to the company's effective lean operation, revenue and cost reduction strategy, and the revenue contribution of the Tianjin container terminal. After deducting the impact of the Tianjin container terminal, after deducting the impact of the Tianjin container terminal, 1H22 and 2Q22 company control terminal profits changed +26.4%/+18.6% year on year, respectively. 2Q22 The company's non-controlled terminal profit declined, with year-on-year changes of -9.2%/-13.2%, respectively. We believe it was mainly temporarily affected by the epidemic in the Yangtze River Delta region, which has now gradually recovered.
Single box revenue from lean operations has increased, and gross margin has increased year-on-year. According to comparable measures (excluding the impact of the Tianjin container terminal merger), 1H22 and 2Q22 companies' controlled terminal single case revenue increased 8.3%/13.0% year-on-year, driving the company's 1H22 and 2Q22 gross margins to increase by 1.4pp/0.7ppt, respectively. We believe that they mainly benefited from the company's lean operation, increased container rate increases at the controlled terminal, and effective cost control measures.
Development trends
Actively lay out global control terminals and seize the opportunities for rate increases under the integration of Chinese ports. According to the company's announcement, the company's capital expenditure for equity investment in the second half of the year is expected to be US$227 million. We believe the company will continue to increase high-quality holding terminals in the future, create a balanced global terminal layout, share the economic growth dividends of emerging markets, and enjoy risk sharing and increased premium capabilities under the network layout. Furthermore, China's port industry is currently in the stage of regional integration, and major port rates have risen to historically high levels. We believe the company is expected to benefit from the increase in China's port rates and achieve increased profitability.
Profit forecasting and valuation
We are keeping our 2022 and 2023 earnings forecasts unchanged. The current stock price corresponds to the price-earnings ratio of 5.5 times/5.1 times in 2022/2023. Maintaining an outperforming industry rating, considering declining market risk appetite, we lowered our target price by 14.5% to HK$6.72, corresponding to 7.3 times the 2022 price-earnings ratio and 6.7 times the 2023 price-earnings ratio. There is 32.0% upside compared to the current stock price.
risks
The global macroeconomic economy is declining, the epidemic is repeated, and the benefits of the company's investment projects have fallen short of expectations.