Key points of investment
In the first half of 2023, Qingdao Port achieved revenue of 9.148 billion yuan, a year-on-year decrease of 7.93%; the company's cost control results were remarkable, with operating costs of 5.781 billion yuan, a year-on-year decrease of 14.75%; achieved a gross profit margin of 36.87%, an increase of 5.05 percentage points over the previous year; and achieved net profit of 2,564 billion yuan, an increase of 10.85% over the previous year.
On a quarterly basis, in the second quarter of 2023, the company achieved revenue of 4.606 billion yuan, a year-on-year decrease of 14.65%, and a year-on-year increase of 1.19%; realized net profit of 1,305 billion yuan, a year-on-year increase of 11.61%, and a year-on-year increase of 3.62%.
Containers: Performance accounted for 24.2%. Continued to benefit from its status as a hub port. Through initiatives such as continuous expansion of routes and expansion of transit business, the company continued to enhance its status as a hub port. The company's container division directly benefited, achieving steady increases in throughput and performance.
Container throughput: 14.52 million TEUs was achieved in the first half of 2023, an increase of 11.6% over the previous year. On a quarterly basis, the first and second quarters of 2023 achieved 688 and 7.64 million TEUs respectively, up 16.6% and 7.5% year-on-year respectively, and 11.0% year-on-year in the second quarter of 2023.
The consolidated business+QQCT performance increased steadily: in the first half of 2023, the container division contributed 794 million yuan in net profit, an increase of 7.70% over the previous year. Among them, the consolidated business achieved revenue of 601 million yuan, an increase of 12.49% over the previous year, and gross profit of 475 million yuan, an increase of 27.85% over the previous year; QQCT contributed 478 million yuan in investment income, an increase of 2.66% over the previous year.
Liquid bulk cargo: Performance accounts for 35.4%. Waiting for Dongjiakou to add production capacity and subsequent release volume The crude oil terminal and supporting crude oil commercial reserve in the Dongjiakou Port Area have been initially released, driving the scale expansion of the liquid bulk division and awaiting long-term release of additional production capacity. In the first half of 2023, the company's liquid bulk division contributed 1,085 million yuan in net profit, an increase of 8.63% over the previous year. Among them, the consolidated business achieved revenue of 2,031 billion yuan, an increase of 10.84% over the previous year, and gross profit of 1,264 million yuan, an increase of 6.31% over the previous year; Qingdao Shihua contributed 129 million yuan in investment income, a decrease of 8.26% over the previous year.
Dry bulk profit recovery. The decline in logistics revenue was due to falling shipping charges. In the first half of 2023, the company's dry bulk division contributed 310 million yuan in net profit, an increase of 17.92% over the previous year. Among them, the consolidated business achieved revenue of 2.137 billion yuan, an increase of 4.35%; the logistics division contributed 607 million yuan in net profit, a decrease of 0.55% over the previous year. Of these, the consolidated business achieved 3.6 billion yuan, a year-on-year decrease of 15.81%. The main reason was that freight forwarding business revenue declined as shipping charges fell.
Port integration continues to advance. Waiting for the status of the hub port to be further highlighted at the end of June 2023, the company announced that it intends to issue shares and cash to purchase some assets of Rizhao Port Group and Yantai Port Group. As port integration in Shandong Province progresses, it is expected that the central position of Qingdao Port will be further highlighted, and it is also expected that after the injection of new assets, it will continue its excellent business experience and deepen collaboration within the province. Among them, the highly profitable liquid bulk business is expected to expand significantly with the completion of the restructuring, which will drive the company's profits to increase. This transaction has not yet been completed. It is expected that the company's status as a hub port will be further highlighted after implementation. It is recommended to pay attention to subsequent developments.
Profit forecasting and valuation
Without considering the company's proposed major asset restructuring announced at the end of June 2023, we expect the company's net profit to be 5.084 billion yuan, 5.729 billion yuan, and 6,557 billion yuan respectively in 2023-2025. The corresponding PE share price is 7.90, 7.01, and 6.22 times, respectively, maintaining the “buy” rating.
Risk warning
The progress of major restructuring fell short of expectations; port integration and business coordination fell short of expectations.