Overview of events

On December 7, Beibu Gulf Port released November throughput data. In November, the company completed cargo throughput of 21.2523 million tons, + 1.83% compared with the same period last year, of which container throughput was 555100 TEUs, + 18.43%. In the first 11 months, the company completed a cumulative cargo throughput of 245.3433 million tons, + 15.38% compared with the same period last year, of which the cumulative container throughput was 4.8478 million TEUs, + 30.02%.

Judged or affected by the decline in coal imports, the growth rate of cargo throughput of Beibuwan Port slowed down in November, while container throughput still maintained a high growth rate.

In November 2020, the cargo throughput of Beibu Gulf Port was + 1.83% year on year, 0.6 percentage points lower than the monthly growth rate of + 2.43% in October, and the growth rate was lower than the annual average. Our judgment is mainly affected by the decline in coal imports. Coal is one of the main commodities imported by Beibu Gulf Port. In 2019, the coal throughput of Beibu Gulf Port exceeded 30 million tons, accounting for about 13% of the company's cargo throughput. According to the data released by the General Administration of Customs on December 7, the country's coal imports in the first 11 months were about 265 million tons,-10.8% year on year, and the decline increased by 2.5% compared with the previous 10 months. we believe that the reduction in coal imports may be the main reason for dragging down the growth of the company's cargo throughput in November.

The company's annual container throughput target is expected to be achieved, and the cargo throughput target is expected to exceed the target.

According to the company's annual report in 2019, the company's production and operating budget target for 2020 is: cargo throughput plan 260 million tons, an increase of 11.52% over the same period last year, of which container throughput plans to complete 5.49 million TEUs, an increase of 32.06% over the same period last year. From the perspective of the cumulative throughput of Beibu Gulf Port in November, the company's annual container throughput target is expected to be achieved, and the cargo throughput target is expected to exceed the target.

Major port project update: "Fangchenggang Jinxi steel technology innovation application base project social stability risk analysis public announcement" reveals the details of Jinxi Iron and Steel Fangchenggang project. The successive commissioning of key port-adjacent projects will become one of the important factors to promote the sustained growth of the cargo throughput of Beibu Gulf Port.

The situation of the Jinxi Iron and Steel Fangchenggang project was publicized in the "risk Analysis of Social Stability of Fangchenggang Jinxi Steel Science and Technology Innovation Application Base Project" released by the portal website of Fangchenggang Municipal people's Government on July 10, 2020. According to the announcement, the total investment of the project is about 49.12 billion yuan. After reaching production, the iron and steel production capacity of the project will be 10 million tons of iron, 1000 million tons of steel, 9.7665 million tons of billet and 9.45 million tons of wood. The construction period of the project is expected to be 24 months. We believe that after the port-adjacent projects such as Jinxi Iron and Steel Fangchenggang Project are put into production in the future, the transport demand for related raw materials and finished products will promote the continuous growth of the cargo throughput of Beibu Gulf Port.

Related news updates in November:

1) on November 15, the RCEP officially signed, and the world's largest free trade agreement was formally concluded. Among the 28 foreign trade routes of Beibu Gulf Port, 19 are ASEAN countries. We believe that the signing of the RCEP Agreement initiated by ASEAN will greatly promote the development of trade between China's southern provinces, especially Guangxi, and ASEAN countries, and accelerate the growth of cargo throughput of Beibu Gulf Port.

2) on November 27, President Xi Jinping mentioned the construction of a new land-sea corridor in his speech at the opening meeting of the China-ASEAN Expo. We believe that with the gradual improvement of the construction of the new land-sea corridor in the west and the continuous cultivation of the habit of southwest sea-rail intermodal transport by the state through freight subsidies, the radiation capacity of the Beibu Gulf Port to the inland will become stronger and stronger in the future. it will also become more and more convenient for the central and western regions to participate in the international division of labor, thus further promoting the growth of cargo throughput of the Beibu Gulf Port.

3) on December 7, the Customs released November foreign trade import and export data. In the first 11 months, ASEAN was China's largest trading partner. The total value of trade between China and ASEAN was about 4.24 trillion yuan, an increase of 6.7% over the same period last year, accounting for about 14.6% of China's total foreign trade.

Investment suggestion: we believe that the logic of the long-term growth of Beibu Gulf Port in the context of the "three structural" adjustments remains unchanged, and the annual cargo throughput target is expected to be exceeded. With the development of China's central and western regions and the development of trade between China and ASEAN, the strategic position of Beibu Gulf Port as an international gateway port in southwest China will continue to improve. We maintain the profit forecast for the company, reiterate the target price of 21.6 yuan per share, and reiterate the "buy" rating.

We maintain the profit forecast of the company's return net profit for 2020-22, which is 11.7, 14.5 / 1.74 billion yuan respectively, and the EPS is 0.72, 0.89, 1.07, respectively. According to the closing price of 10.84 yuan per share on December 7, 2020, the corresponding PE is 15.1, 12.3, 10.2 times. We reaffirm the company's target price of 21.6 yuan per share and reiterate its "buy" rating.

Risk hint

The macroeconomic environment may decline more than expected; the duration of the epidemic; the short-term announcement of the Beibu Gulf Port convertible bond conversion stock price has not yet been determined; the company's per ton cargo income may fluctuate in the short term.