Credit Suisse released a research report that expects the fundamentals of mainland port stocks to remain stable, with low volume growth, and recommended the industry's preferred China Merchants Group (00144-HK) and Cosco Pacific (01199-HK).

Credit Suisse reported that the market is concerned about the profit growth of port stocks after 2011, but the bank believes that the fundamentals of the industry remain stable, there is low growth in freight volume, and the average selling price improves. It is believed that the profit growth rate of port stocks is 15-18 per cent a year. Credit Suisse forecasts that China's container throughput will grow by 10-11 per cent between 2011 and 2010, with an increase of 5-10 per cent for international container freight and 10-15 per cent for the mainland.

In addition, Credit Suisse believes that the price-to-earnings ratio of the port sector is 14.6 times, which is still lower than the historical average of 19.7 times, and that China Merchants and COSCO Pacific are the industry's first choice, mainly due to strong earnings per share growth and the bank's preference for Xiamen Port Port (03378-HK), mainly because of the higher dividend relative free cash flow yield.

Share name / investment rating / target price

China Merchants (00144-HK) / outperform the big market / 36.6RMB.

Cosco Pacific (01199-HK) / outperform the big market / 15.1RMB.

Dalian Port (02880-HK) / neutral / 3.60 yuan.

Tianjin Port Development (03382-HK) / neutral / 1.95 yuan.

Xiamen Port Administration (03378-HK) outperformed the big market / 1.95 yuan.