Port throughput in Tianjin was significantly affected by the August explosion, but it has begun to recover. Since the August explosion had a significant impact on cargo volume growth, the cumulative cargo throughput of Tianjin increased 0.1% year-on-year in the first 11 months of 2015, according to figures from China's Ministry of Communications. Although port facilities were not substantially affected by the accident, cargo handling was affected for safety reasons. Monthly container throughput and total monthly cargo throughput declined significantly in August and September. However, growth began to rebound in October and stabilized in November. We think the company has begun to recover from the accident.

Net profit for the first half of 2015 was higher than expected, mainly due to the strong performance of the bulk cargo handling business, but it was affected by the explosion starting in August. We slightly raised our 2015-2017 net profit forecasts by 2.7%, 5.8%, and 2.7% to reflect positive expectations for bulk cargo handling. Earnings per share for 2015-2107 are expected to be HK$0.147, 0.152 and HK$0.158.

The company's stock price has been under pressure since the explosion. We think the company has begun to recover from the accident, and current valuations and dividend yields are becoming attractive again. 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 raised the investment rating to “Collect”, but lowered the target price to HK$1.60 to reflect the declining industry valuation. Our target price is equivalent to 10.9 times 11.6 times and 10.1 times the price-earnings ratio 2015-2017.