Key points of investment
In the first quarter of 2023, Qingdao Port achieved cargo throughput of 161 million tons, an increase of 9.6% over the previous year. Among them, container throughput reached 6.88 million TEUs, an increase of 16.6% over the previous year. The company's outstanding container throughput performance is expected to benefit mainly from its prominent position as a hub port, and the smooth implementation of measures such as adding new routes and expanding transit, compounded by earlier container rate increases, laying the foundation for improved subsequent performance.
Incident: Qingdao Port (601298) issued an announcement on throughput for the first quarter of 2023, disclosing the company's caliber throughput data for the first quarter of 2023, including branches, subsidiaries, joint ventures and associated companies:
Cargo throughput: Achieved 161 million tons, a year-on-year increase of 9.6%
Qingdao Port: 154 million tons, a year-on-year increase of 9.8%
Weihai Port: 0.07 million tons, a year-on-year increase of 4.4%
Container throughput: Achieved 6.88 million TEUs, a year-on-year increase of 16.6%
Qingdao Port: 6.61 million TEUs, a year-on-year increase of 16.4%
Weihai Port: 270,000 TEUs, a year-on-year increase of 22.7%
The position of a hub port supports the improvement in container volume and price
The company's 23Q1 container throughput growth rate performed excellently. We believe that excluding the return of empty containers, the company mainly benefited from its prominent position as a hub port. Initiatives such as adding new routes and expanding international transit were implemented smoothly. Combined with the increase in container rates in the previous period, the improvement in volume and price is expected to support continued improvements in performance.
New routes: The company added 28 new container routes in 2022. The total number of routes continues to rank first among northern Chinese ports, and is expected to accelerate container throughput growth.
Expanding international transit: Shandong Province has proposed plans such as speeding up the construction of an international container transport hub in Northeast Asia and a globally important transit and distribution base for energy materials at Qingdao Port. The improving development environment is expected to support the expansion of the company's transit container capacity.
The impact of container rate adjustments continues: on February 9, 2022, QQCT announced that the handling fees for 40-foot and 20-foot heavy containers in foreign trade will increase by about 14% and 12% respectively, which is expected to continue to drive revenue generation and profitability of the company's container business.
Regional integration continues to advance. I am optimistic about the absolute profit value brought about by the company's steady growth. On the one hand, Qingdao Port Co., Ltd. completed a holding on the development of Weihai Port, which is expected to promote the collaborative development of Qingdao Port and Weihai Port; on the other hand, with the transfer of the company's actual control to the Shandong Port Group at the beginning of the year, port integration in Shandong Province continues to advance, and I am optimistic about the overall increase in Shandong port rates.
Furthermore, the company insists on “increasing routes, expanding cabin capacity, and expanding transit”. We are optimistic about the company's transit port development opportunities in Northeast Asia, which is expected to lead to an excessive increase in the company's throughput. There are conditions for continuous improvement in volume and price, and I am optimistic about the absolute profit opportunities brought about by the company's steady growth.
Profit forecasting and valuation
Taking into account the development of the company's various business lines, we expect the company's net profit to be 5.084 billion yuan, 5.740 billion yuan, and 6.468 billion yuan respectively in 2023-2025. The corresponding current stock price PE will be 8.0 times, 7.1 times, and 6.3 times, respectively, maintaining the “buy” rating.
Risk warning
Port integration fell short of expectations; demand for container shipping fell short of expectations; returns from various investment projects fell short of expectations.