The 2018 1H results were slightly below expectations Tianjin Port announced the 2018 1H results: operating income of 5.9 billion yuan, down 17.8% year on year; net profit attributable to the parent company was 447 million yuan, down 18% year on year, corresponding to profit of 0.27 yuan per share, slightly lower than the 14% decline we had anticipated, mainly due to the decline in handling revenue. On a quarterly basis, net profit for the first quarter fell 13% year on year. Excluding one-time income from sale of equity, net profit after deduction (123 million yuan) fell 55%, mainly due to the sharp decline in coal throughput due to the fact that Tianjin Port stopped accepting road transport coal at the end of April 2017; profit for the second quarter (218 million yuan) fell 23% year on year, which is already significantly narrower than the first quarter. Overall throughput increased, but dry bulk goods declined: In the first half of the year, the company's throughput increased 21% year on year, with bulk goods throughput falling 8.9% year on year, and dry bulk throughput such as coal, steel, iron ore, etc. There was a certain decline; container throughput (by TEU) increased 114% year on year, mainly due to the completion of acquisitions of container assets such as Alliance International (40%), Tianjin Port Container Terminal (100%), and Eurasia International (40%) in September last year. In the first half of the year, the company's handling revenue decreased by 364 million yuan year-on-year, but due to relatively fixed costs such as depreciation, some companies engaged in the bulk goods business lost money (for example, the net profit of Tianjin Port Coke Terminal Company in the first half of last year was 57.81 million yuan, while the loss in the first half of this year was 37.18 million yuan). Trends in container handling business: After completing last year's asset injection, the company has become the main operating platform for handling and logistics business under the Tianjin Port Group, which is conducive to enhancing business strength and collaboration among various businesses, and is beneficial to the long-term development of container business. Short-term dry bulk throughput may continue to be under pressure. Tianjin Port has stopped receiving coal for road transportation since the end of April 2017, so the second half of this year will no longer be significantly affected by this policy compared to the second half of last year, and the company has taken various measures to deal with it. However, considering the possible impact of environmental protection policies in the Beijing-Tianjin-Hebei region on downstream demand, port operations, and collection ports, we believe that dry bulk throughput such as coal, ore, and steel may continue to face some pressure. The future highlights lie in the potential opportunities brought by the Xiong'an New Area and the Free Trade Zone. Profit forecast Although profit for the first half of the year fell 17.8% year on year, considering the low profit base for the fourth quarter of last year (only RMB 23.45 million), we kept our 2018/19e profit forecast of 804 million yuan/903 million yuan unchanged, compared to a 2.5% year-on-year decline and an increase of 12.3%. The valuation and recommended current stock price correspond to 15.7/14 times P/E in 18/19. Maintaining a neutral rating and target price of 8.90 yuan, corresponding to 18.5/16.5 times P/E in 18/19, there is 18% room compared to the current stock price. Risk and environmental policies have become more stringent, throughput has fallen short of expectations, and costs have risen.