The 2017 results were in line with expectations, and Ningbo Port announced 2017 results: operating income of 18.1 billion yuan, up 11% year on year; net profit attributable to parent company was 2.68 billion yuan, up 16% year on year, corresponding to earnings of 0.20 yuan per share, in line with the performance report. After deducting non-net profit of 2.32 billion yuan, a year-on-year increase of 9%. Throughput has achieved rapid growth: Driven by macroeconomic improvements, the company's major product categories achieved rapid growth in 2017. Total cargo throughput increased 8.4% to 7.2 billion tons. Ningbo Zhoushan Port ranked as the world's largest port for 9 consecutive years. Among them, the container throughput was 25.97 million TEUs, an increase of 13.8% over the previous year (higher than the national average of 8.3%), while the throughput of ore, coal, crude oil, and liquid chemicals increased by 14%/10%/4%/8%, respectively. Costs are rising, and gross margin is under pressure: Due to rising labor and depreciation costs and falling unit prices for some types of goods (mainly ore), the gross margin of container, ore, and integrated logistics businesses in 2017 decreased by 5.3/5.8/4.0 percentage points, respectively, compared to 2016. Overall gross margin was relatively stable due to a sharp decline in the volume of the low-margin trade sales business (revenue fell 49% year over year). Development trend throughput is expected to continue to grow rapidly: the positive trend in the European and American economy and external demand remains unchanged, supporting the growth of import and export trade: the company's container throughput growth rate reached 13% in the first two months of this year, and the March PMI new export order index rose from 49% last month to 51.3%. According to the company's business plan, it is planned to complete cargo throughput of 760 million tons in 2018, an increase of 5.6%; complete container throughput of 27.95 million TEUs, an increase of 7.6%. Foreign trade container rates may face some pressure. According to the results of previous anti-monopoly investigations by the Development and Reform Commission, in 2018, Ningbo Zhoushan Port will reduce foreign trade import and export container handling costs from 621 yuan/box to 490 yuan/box, a reduction of 21%. However, the actual impact is relatively limited and remains to be seen, because: 1) only the volume of foreign trade import and export containers is affected, and 2) because the port has preferential treatment for shipping companies, the actual single box revenue is lower than the standard rate. Profit Forecast We lowered our 2018 profit forecast by 5% to $2.56 billion to reflect rising costs and a 10% recurring profit growth rate. The introduction of the 2019e profit forecast was 2.9 billion yuan, an increase of 13% over the previous year. The valuation and recommended company's current stock price corresponds to 27.4/24.2 times P/E in 18/19. Maintaining a neutral rating and target price of RMB 5.47, corresponding to 28/25 times P/E in 18/19, there is a 3% margin compared to the current stock price. The growth rate of risk throughput is lower than expected, foreign trade container handling charges have declined, and costs have continued to rise sharply.