Qingdao Port released its 2023 Annual Report on March 28, 2024:
Throughout 2023, the company achieved operating income of 18.173 billion yuan, down 5.66% year on year; realized net profit of 4.923 billion yuan, up 8.72% year on year; net cash flow from operating activities was 6.151 billion yuan, down 1.31% year on year; basic earnings per share was 0.76 yuan, up 8.57% year on year; and the weighted average return on net assets was 12.70%, up 0.27 percentage points year on year.
In Q4 2023, the company achieved operating income of 4.515 billion yuan, up 1.19% year on year and 0.30% month on month; realized net profit of 1,135 billion yuan, up 5.19% year on year, down 7.31% month on month; net cash flow from operating activities was 1,846 billion yuan, down 16.59% year on year, up 45.81% month on month.
Containers: Double-digit growth in throughput. 1) In 2023, the company and its joint ventures and joint ventures (excluding the equity ratio of related joint ventures and joint ventures held by the company) completed a full year of container throughput of 3.02 million TEU, an increase of 11.9% year on year; 20 new container routes were added, the total number and density of routes steadily ranked first in northern China, and international transit volume increased 14% year on year; 9 new inland ports and 7 sea-rail intermodal trains. Sea-rail intermodal transport containers completed 2.2 million TEU, an increase of 16% year on year, maintaining the number one coastal port in China for nine consecutive years. 2) In 2023, the company's container handling and supporting services achieved segmental performance of 1,889 million yuan, an increase of 13.1% over the previous year, mainly due to increased business volume to achieve revenue growth and efficiency; among them, the holding company achieved profit of 924 million yuan, an increase of 16.8% over the previous year; investment income in joint ventures and joint ventures was 965 million yuan, an increase of 9.7% year on year.
Dry and loose groceries: cultivate the hinterland to expand supply growth. 1) In 2023, the company and its joint ventures and joint ventures (excluding the equity ratio of related joint ventures and joint ventures held by the company) completed 244 million tons of dry and loose groceries throughout the year, up 2.2% year on year; pulp business volume increased 5% year on year, maintaining the number one port for pulp imports in the world; non-ferrous metals business increased 57% year on year, continuing to maintain a leading position in the country's coastal ports; developed 15 new food customers, and the business volume increased 25% year on year. 2) In 2023, the company achieved segmental performance of 671 million yuan in metal ore, coal and other cargo handling and supporting services, an increase of 35.6% over the previous year. Mainly, the handling berths and supporting depots in the Dongjiakou port area were put into operation. The volume of operations for pulp, grain and other goods increased, increasing revenue and efficiency.
Liquid bulk: Capacity expansion amplification and synergy effects. 1) In 2023, the company and its joint ventures and joint ventures (excluding the equity ratio of related joint ventures and joint ventures held by the company) completed a full year of liquid bulk throughput of 111 million tons, the same as the previous year; 2.6 million cubic meters of crude oil storage tanks were put into operation, and the Dongjiakou crude oil commercial reserve became the largest single storage area in the northern coastal port of China; 7 new refineries and trader customers developed 6.23 million tons of trade oil; completed 49.93 million tons of trade oil, an increase of 30% over the previous year. 2) In 2023, the company's liquid bulk handling and supporting services achieved segmental performance of 2,539 billion yuan, an increase of 9.8% over the previous year, mainly due to the expansion of crude oil commercial reserves, expansion of docks and warehousing synergy effects, and an increase in handling, warehousing revenue and profits.
Port consolidation and dividend growth: The dividend effect may continue to be unleashed. 1) The company plans to purchase some assets of Shandong Port Rizhao Port Group and Shandong Port Yantai Port Group by issuing shares and paying cash. It is expected that after the restructuring is completed, the overall competitiveness of the company's dry bulk goods and liquid bulk goods sector will be further strengthened, and the position of the hub port is expected to further improve, thus driving the company's profits to increase. This transaction has not yet been completed, so it is recommended to keep an eye on subsequent developments. 2) The company plans to pay a cash dividend of 0.2927 yuan (tax included) per share in 2023, an increase of 8.7% over the previous year. The total dividend accounts for about 38.59% of the net profit. Based on the closing price of 7.33 yuan on March 28, 2024, the estimated dividend rate is about 4.0%.
Profit forecast, valuation and investment rating: Without considering the company's proposed major asset restructuring, based on the company's business development trends, the company is expected to achieve net profit of 54.19 billion yuan, 60.14 billion yuan, and 6.593 billion yuan respectively in 2024-2026, with earnings per share of 0.83, 0.93, and 1.02 yuan, respectively. The current stock price is 7.33 yuan. The corresponding PE is 8.8X/7.9X/7.2X, maintaining the “buy” rating.
Risk warning: macroeconomic downturn risk, hinterland economic fluctuation risk, industry rate adjustment risk, port integration falling short of expectations, risk of model assumptions and calculation errors, risk of untimely information data updates.