The performance of 1H19 is much higher than our expectations, and the deduction is in line with expectations.
The company announced 1H19 results: income 11.186 billion yuan, an increase of 2.6% over the same period last year; return to the mother net profit of 2.066 billion yuan, corresponding to 0.16 yuan per share, an increase of 32% over the same period last year, much higher than expected, of which the main growth contribution came from land collection and storage (pre-tax income of 640 million yuan), deducting non-post-tax net profit of 1.455 billion yuan, a slight decrease of 2.7% over the same period last year, in line with expectations.
In terms of segment performance (excluding minority shareholders' profits and losses), the net profit of containers and iron ore increased by 11% and 10% respectively compared with the same period last year, while the net profit of crude oil, other goods and integrated logistics fell by 10%, 13% and 11%, respectively. It is the main reason for deducting the decline in non-net profit.
Cargo throughput increased slightly: in the first half of the year, the company's cargo throughput increased by 3.7% compared with the same period last year, of which ores were basically the same, while crude oil and oil products increased by 7.4% and 4.8% respectively. Container throughput maintained a moderate growth (6%).
Trend of development
Container hub port, the throughput growth rate is faster than the whole country. As the second largest port in the country in terms of container throughput, the company's container throughput increased by 6% in the first half of the year compared with the same period last year, still faster than the national average of coastal ports (5%), mainly due to the hinterland economy and the company's hub port status. The company has undertaken the supply of goods and expanded its hinterland in a variety of ways, and the volume of regional and sea-rail transport containers has increased by 20.3% and 46.7% respectively compared with the same period last year. Looking forward, due to the overall foreign trade situation is not optimistic, facing uncertainty, we believe that the container business is expected to maintain a relatively stable performance.
Profit forecast and valuation
We keep the profit forecast after deducting non-profit unchanged. Due to the confirmation of one-time land income, we raise the net profit forecast for 2019 by 17% to 3.4 billion yuan (the net profit forecast after deducting non-profit for 2019 remains unchanged at 2.896 billion yuan), and maintain the net profit forecast of 3.092 billion yuan for 2020. The current share price corresponds to 17.5 times (deducting non) / 16.4 times earnings in 2019 / 2020. Maintain a neutral rating and a target price of 4.40 yuan, corresponding to 20.0 times 2019 price-to-earnings ratio and 18.7 times 2020 price-to-earnings ratio, which has 14.0% upward space compared with the current stock price.
Risk
The growth rate of throughput was lower than expected, and the loading and unloading rate declined.