Incident: Tangshan Port released its 2022 annual report and 2023 quarterly report. 2022: The company achieved operating income of 5.620 billion yuan, a year-on-year decrease of 7.49%; net profit of 1,690 million yuan, a year-on-year decrease of 19.11%. The basic EPS in 2022 was 0.29 yuan; net profit after deduction of Fumo was 1,593 million yuan, a decrease of 4.25% year-on-year. In 2022, the company plans to distribute a cash dividend of 2 yuan (tax included) for every 10 shares, with a dividend ratio of 70.14%, corresponding to the closing price on May 16, 2023, with a dividend rate of 5.26%.

First quarter of 2023: The company achieved operating income of 1,458 million yuan, an increase of 18.25% over the previous year; net profit of 516 million yuan, an increase of 30.88% over the previous year; the basic EPS was 0.09 yuan; net profit after deduction of 515 million yuan, an increase of 34.17% over the previous year.

Comment:

Focusing on the bulk cargo business, the main cargo volume increased steadily in 2022: the company is mainly engaged in integrated port transportation business. Its main business area is in the Jingtang port area of Tangshan Port. It is a large port enterprise group that dominates the construction and operation of the Jingtang Port area of Tangshan Port. The company has now formed a diversified goods pattern that mainly transports bulk goods such as ore, coal, steel, slag, sand and stone, and is complemented by goods such as automobiles, food, liquefied products, and machinery and equipment. In 2022, the company achieved operating income of 5.620 billion yuan, a decrease of 7.49% over the previous year, and achieved net profit of 1,690 million yuan to the mother, a decrease of 19.11% over the previous year.

This is mainly due to the year-on-year decline in trade revenue and container sector revenue from Beijing International Trade Company since September 2021 and Jintang Container Company from October 2021. After excluding the impact associated with the transfer of shares in Beijing International Trade Company, Jintang Container Company and container berth assets in 2021, total profit increased 1.44% year on year; Guimu's net profit decreased 0.49% year on year.

In 2022, the company's main cargo volume increased steadily, with completed cargo throughput of 207 million tons, up 1.25% year on year; ore completed 96.42 million tons, up 4.96% year on year; coal completed 65.12 million tons, down 13.11% year on year; steel completed 14.59 million tons, up 6.03% year on year; gravel completed 19.22 million tons, up 52.92% year on year. The company completed 12.058 million tons of other products, an increase of 2.96% over the previous year. Ore and coal are the company's main types of goods. In 2022, ore throughput accounted for 46.49% of the company's total cargo throughput, and coal throughput accounted for 31.40% of the company's total cargo throughput.

Investment strategy: Tangshan Port focuses on bulk cargo handling and storage business. It has outstanding location advantages, a broad economic hinterland, steady growth in cargo traffic, and strong performance guarantees. At the same time, the company implements a high dividend policy and focuses on shareholder returns. Furthermore, in the context of port resource integration in Hebei Province, it faces new development opportunities in the context of port resource integration in Hebei Province. In summary, we expect the company's net profit to be 21.23, 22.95, and 2,504 billion yuan respectively in 2023-2025, and EPS of 0.36, 0.39, and 0.42 yuan, corresponding to the closing price of May 16, 2023. PE is 10.6X, 9.8X, 9.0X, and PB is 1.1X, 1.1X, 1.0X, assuming a dividend rate of 70% and a dividend rate of 6.60%, 7.13%, and 7.78%. Maintain an “increase in holdings” rating.

Risk warning: changes in economic cycles, development trends in related industries, rising prices of raw materials, labor costs, etc., limited production capacity of hinterland enterprises, increased environmental expenses, etc.