Tianjin Port Development's revenue in 2015 fell 38.8% year-on-year to HK$20.542 billion. The decline was mainly due to a decline in sales revenue during the period. As for the cargo handling business, non-containerized cargo throughput increased 5.4% year over year, and container throughput increased 0.2% year over year. Revenue from the handling business was HK$8.512 billion, an increase of 8.9% over the previous year. However, due to the devaluation of the RMB, the company recorded an exchange loss of HK$316 million in 2015 due to its US dollar and Hong Kong dollar liabilities. As a result, net shareholders' profit fell 21.9% year over year to HK$639 million, lower than our expectations.

Slight adjustments to earnings forecasts. We lowered our revenue forecast to reflect a further decline in revenue from the sales business, which had a low gross margin and limited contribution to net profit. Net profit in 2015 was lower than expected mainly due to exchange losses. We think the yuan will also depreciate slightly in 2016. Overall, we slightly lowered our net profit of 4.0% and 3.5% in 2016 and 2017 to reflect the updated performance expectations of the port of Tianjin.

We think the company is recovering from the accident, and the current valuation and dividend yield are very attractive. As an important port in North China and one of the top ten ports in the world, we expect Tianjin Port to perform steadily. We maintained “collection” of investment ratings, but lowered the target price to HK$1.40 to reflect declining industry valuations. Our target price is equivalent to 9.6 times, 9.2 times, and 9.1 times the 2016-2018 price-earnings ratio, or 0.7 times the 2016 net price-earnings ratio.