Main points of investment

Event

On March 30, the company issued a forecast for the first quarter of 2017. During the reporting period, the company achieved a net profit of 20.51 million to 23.44 million, compared with 5.86 million in the same period last year, an increase of 250% to 300% over the same period last year.

Thanks to Longji consolidated table, the results increased significantly in the first quarter.

The company's parent net profit increased by 250% to 300% compared with the same period last year, and the performance increased significantly, mainly due to the following two reasons:

(1) in 2016, the company completed a major asset restructuring of Longji Company. Longji Company changed from a shareholding company to a holding subsidiary and was included in the scope of the consolidated statements of the company. The scope of the consolidated statements of the company in the first quarter of 2017 was expanded compared with the same period last year.

(2) the loading and unloading business segment of the company's crude oil, oil products and liquid chemicals increased to a certain extent in the first quarter of 2017 compared with the same period last year.

We expect that the company's crude oil, oil products and liquid chemical loading and unloading business will continue to grow, while benefiting from the global shipping recovery, the recovery of container business, especially inland river container business, will be further accelerated. To achieve "oil chemicals + containers" two-wheel drive, superimposed shipping industry to accelerate recovery, macro good to help the company move forward quickly.

Global shipping towards a real recovery, macro good led the port to pick up since February 14, the BDI index rebounded sharply, the Baltic dry bulk Freight Index (BDI) rose continuously. Benefiting from improved demand for iron ore and coal, the BDI index closed at 1338 on March 29, its highest level since November 2014 and nearly doubled from its lowest point of 95.33%.

Oil prices remain low. According to the forecast of EIA, the average price of oil distribution in 2017 is $53.50 / barrel, which is lower than the previous market expectation of $55 / barrel ~ $60 / barrel. The operation of low oil prices is conducive to reducing shipping costs, improving margins and increasing profit margins.

In February, the container throughput of ports nationwide was 1538.0 TEU, up 7.8 percent from the same period last year, and the cargo throughput of ports nationwide was 913 million tons, up 10.1 percent from the same period last year. The report on the situation of Waterway Transport in 2016 and 2017 released by the Shanghai Shipping Exchange pointed out that with the accelerated growth of the world economy and international trade, the growth of global container transport demand will continue to expand, which is expected to increase by about 3% in 2017. The port throughput data in February were gratifying. The business volume of many ports in Lianyungang, Tangshan Port, Qinhuangdao Port and Xiamen Port achieved double-digit growth, and shipping moved towards a real recovery.

Port resources in the province are integrated, and the reform of state-owned enterprises is expected to start again.

Jiangsu Province held a symposium on speeding up the development of transportation in Jiangsu Province at the end of 2016 to listen to opinions and suggestions on the establishment of provincial port groups. After the establishment of Jiangsu Port Group, Nanjing Port will be the most direct beneficiary. Prior to this, Zhejiang Seaport Investment and Operation Group Co., Ltd. (Zhejiang Seaport Group) was established in Zhejiang Province on August 21, 2015. The group is used as a platform to integrate and unify the port companies of Ningbo Port, Zhoushan Port, Jiaxing Port, Taizhou Port and Wenzhou Port in the province. In view of the successful precedent of Zhejiang, the integration of port resources in Jiangsu Province is also advancing in an orderly manner. Jiangsu Province has formulated the "implementation Plan for promoting the pilot Reform of Port Integration in the region below Nanjing, Jiangsu Province". The integration of Anchorage, shoreline and shipping lines is clarified item by item. Zhang Jinghua, vice governor of Jiangsu Province, said that starting from the national strategies such as the "Belt and Road Initiative" and the Yangtze River Economic Belt, we should promote the establishment of Jiangsu port groups and deepen the reform of the integration of coastal ports along the Yangtze River. The establishment of the port group is conducive to the integration of Jiangsu port resources, expand its own advantages, connect the Yangtze River economic belt, and improve the overall strength of Jiangsu ports. Jiangsu, as a major province along the Yangtze River and a major economic province, has not only Nanjing Port, the provincial capital, but also Suzhou Port, Nantong Port, Zhenjiang Port, Taicang Port, Lianyungang Port and other large ports. Nanjing Port and Lianyungang in Jiangsu Province will be the most direct beneficiaries of the integration of port resources in Jiangsu.

The Yangtze River Economic Belt is pushed forward in depth.

The company is located in the most economically developed and active Yangtze River Delta region in China, relying on the central city status of Nanjing and the geographical advantages of economically developed regions such as southern and central Jiangsu. In particular, the development of many large petrochemical enterprises in the vicinity, such as Jinling Petrochemical, Yangzi Petrochemical, Yangba Company, Nanhua Group, Yizheng Chemical Fiber, etc., makes the business growth trend obvious.

The lower reaches of the Yangtze River Economic Belt is an important transportation hub and logistics center in East China. It is "Belt and Road Initiative".

The node of the strategic intersection area of the strategy and the Yangtze River economic belt. Limited by the navigable clearance height of the Nanjing Yangtze River Bridge, Nanjing Port is the farthest port that a 10,000-ton seagoing ship can berth after entering the Yangtze River, which makes the company have better collection and distribution conditions than other ports. The implementation of the strategy of the Yangtze River Economic Belt shows that the state policy supports actively promoting the construction of the Yangtze River Economic Belt, carrying out major projects such as the regulation of golden waterways and ports along the river in an orderly manner, and building a comprehensive three-dimensional channel.

Profit forecast and investment suggestion

It is estimated that the net profit of the company from 2017 to 2018 is 129 million yuan and 144 million yuan, the EPS is 0.35 yuan and 0.39 yuan, and the corresponding PE is 77x and 69x. Taking into account the company's asset restructuring and the merger of container handling business, the shipping industry as a whole is showing a pick-up trend, the performance is expected to continue to grow at a high speed, raising the 2017 target price to 28.2 yuan, giving "overweight" rating.

Risk hint

Integrate with the company's business integration and enterprise management risk; natural, accident risk.