The company released its 2023 annual report: 1) 2023 operating income of 18.173 billion yuan, down 5.66% year on year; net profit of 4.92 billion yuan, up 8.7% year on year; net profit without return to mother of 4.79 billion yuan, up 10.6% year on year; basic earnings per share of 0.76 yuan, up 8.6% year on year; balance ratio 26.1%, down 2.1 percentage points from the end of the previous year; comprehensive gross margin of 35.6%, up 4.1 percentage points from last year; weighted average return on net assets of 12.70%, up 0.27 Percentage points. 2) The profit distribution plan is to pay a cash dividend of 0.2927 yuan (tax included) per share, an increase of 8.7% over the same period last year, with a total dividend of 1.9 billion yuan, accounting for 45% of the distributable profit for the year and 38.59% of net profit attributable to mother. 3) On a quarterly basis, 2023Q1-4 achieved net profit of 12.6, 13.1, 12.3, and 1.14 billion yuan, respectively, +10.2%, +11.5%, +7.8%, and +5.2% year-on-year; net profit without return to mother was 12.3, 12.9, 11.9 billion yuan, and 1.08 billion yuan, respectively, and +11.5%, 13.7%, 9.8%, and 7.2% year-on-year.
Port throughput grew steadily in 2023. In 2023, the company, joint ventures, and joint ventures (excluding the equity ratio of related joint ventures and joint ventures held by the Company) completed the annual cargo throughput of 664 million tons, an increase of 5.8% over the previous year. Among them, the completed container throughput was 3.02 million TEU, up 11.9% year on year; completed dry bulk cargo throughput was 244 million tons, up 2.2% year on year; and completed liquid bulk throughput was 111 million tons, which was the same year on year.
The combined business performance of the three major ports of containers, dry bulk goods, and liquid bulk cargo was +13.8% year-on-year. In terms of profit structure, the company's profit accounts for the largest share of the liquid bulk business (2.5 billion yuan in 2023, yoy +9.8%, accounting for 35%), followed by container business (1.89 billion yuan in 2023, yoy +13.1%, accounting for 27%), logistics and value-added services (1.5 billion yuan in 2023, yoy +2.1%, accounting for 21%), and dry bulk business (671 million yuan in 2023, yoy +35.6%, accounting for 9%). 1) Container business: Achieved revenue of 1,199 million yuan, an increase of 0.6 billion yuan over the same period of the previous year, an increase of 0.5%; segment performance of 1,889 million yuan, an increase of 218 million yuan over the same period of the previous year, an increase of 13.1%. In 2023, 20 new container routes were added, and international transit container volume increased 14% year over year. 2) Dry bulk goods business: Achieved operating income of 4.307 billion yuan, an increase of 335 million yuan over the same period of the previous year, or 8.4%; segment performance of 671 million yuan, an increase of 176 million yuan over the same period last year, an increase of 35.6%. 3) Liquid bulk business: Achieved operating income of 4.242 billion yuan, an increase of 723 million yuan over the same period of the previous year, or 20.5%; segment performance of 2,539 million yuan, an increase of 226 million yuan over the same period last year, an increase of 9.8%. 4) Logistics and port value-added services: Achieved revenue of $6.949 billion, a decrease of $1,193 billion over the same period last year, a decrease of 14.7%; segment performance of $1,522 million, an increase of $31 million over the same period last year, or 2.1%.
Regional integration dividends are expected to be realized, and high-quality port leaders have opportunities to reshape value. Currently, the company is still planning a major asset restructuring with Rizhao Port and Yantai Port, and plans to integrate some terminal assets related to liquid bulk and dry bulk goods at Rizhao Port and Yantai Port. As competition among peers weakens, the position of Qingdao Port as a hub port is expected to become more prominent, and long-term growth can be expected.
Investment advice: We expect the company to achieve net profit of $54.2, 59.6 billion and 6.44 billion yuan respectively in 2024-26, with year-on-year increases of 10.2%, 9.9%, and 8.1%, respectively. The corresponding EPS is 0.84, 0.92 and 0.99 yuan, respectively, and PE is 9, 8, and 7 times, respectively. Based on the 39% dividend ratio, calculated at the 3/29 closing price, the corresponding dividend rates for 24-25 are 4.4% and 4.8%, respectively. The company was given 1.4 times PB of the estimated net assets in 2024, corresponding to the target price of 9.9 yuan, which is expected to be 34% of the space compared to the current price, maintaining the “recommended” rating.
Risk warning: There is a risk that the economy will decline and that the hinterland economy will fluctuate significantly.