Qingdao Port issued the “Notice on Issuing Shares and Paying Cash to Purchase Assets and Raising Supporting Funds and Related Transactions Accepted by the Shanghai Stock Exchange”:

On September 26, 2024, the company received the “Notice on Accepting Applications to Purchase Assets and Raise Supporting Funds by Qingdao Port International Co., Ltd.” (Shanghai Stock Exchange (M&A) (2024) No. 25) issued by the Shanghai Stock Exchange. The Shanghai Stock Exchange checked the application documents submitted by the company to issue shares to purchase assets and raise supporting funds in accordance with the relevant regulations, believing that the application documents were complete and complied with the legal form, and decided to accept them and review them in accordance with the law.

The proposed asset package focuses on liquid bulk goods, and the company's overall competitive strength is expected to increase. 1) According to the “Qingdao Port International Co., Ltd. Report on Issuing Shares and Paying Cash to Purchase Assets and Raising Supporting Funds and Related Transactions (Draft)” issued by the company, the company plans to issue shares to Rizhao Port Group and Yantai Port Group and pay cash to purchase 100% of the oil company's shares, 50.00% of Rizhao Shihua's shares, and 51.00% of Gangyuan Pipeline's shares; the total consideration for the underlying assets is 9.44 billion yuan, of which 4.63 billion yuan in cash billion yuan. According to the announcement, in order to better improve the asset quality of listed companies and the level of earnings per share, the transaction removed the target assets of dry bulk grocery ports with poor profitability and supporting business, and added the target assets related to liquid bulk port handling and supporting business where profits and construction progress improved rapidly since the previous plan announcement. Based on financial data estimates for 2023, the ROE of the company's proposed acquisition of asset packages is about 11.7%, which is higher than the ROE level of listed port companies in the SW port sector other than Qingdao Port during the same period. At the same time, the assets to be acquired in this transaction have significant synergy effects with the company's existing liquid bulk terminal related business, which helps the company improve the geographical layout of the port area, integrate customer resources, and expand its business scale and market share. 2) According to the “Examination Preparation and Review Report” issued by Shinaga Zhonghe, the impact of raising supporting capital was not taken into account. Based on 2023 financial data estimates, after the transaction was completed, the asset size, revenue scale, and profit scale of listed companies all increased compared to before this transaction, and earnings per share also increased. After the transaction is completed, the listed company will also promote the expansion of the listed company's asset scale, business revenue growth, and profitability through deep integration of various elements such as assets, personnel, and management, and enhance the listed companies' resilience to risk and overall competitive strength.

The merger, acquisition and restructuring project has been accepted by the Shanghai Stock Exchange, and the pace of implementation of the New Deal is expected to accelerate. On September 24, 2024, the China Securities Regulatory Commission issued “Opinions on Deepening Market Reform in Mergers, Acquisitions and Restructuring of Listed Companies”, which proposed “supporting listed companies in traditional industries to acquire the same industry or upstream and downstream assets, increase resource integration, and reasonably increase industrial concentration. Establish simple restructuring review procedures, absorb mergers and acquisitions between listed companies, and purchase assets by high-quality companies with operating standards, market capitalization exceeding 10 billion yuan, and information disclosure quality evaluation of A for 2 consecutive years (not constituting a major asset restructuring), streamlining the review process and shortening the review registration time.” etc. content. Currently, the company's merger, acquisition and restructuring project has been accepted by the Shanghai Stock Exchange. It still requires approval by the Shanghai Stock Exchange and registration before it can be implemented. Benefiting from the introduction of this new policy, the speed of implementation is expected to accelerate in the future.

Profit forecast, valuation and investment rating: Without considering the impact of the company's proposed acquisition assets, the company is expected to achieve net profit of 5.419, 6.014, 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 8.65 yuan. The corresponding PE is 10.4X/9.3X/8.5X, respectively, maintaining a “buy” rating.

Risk warning: macroeconomic downside risk, declining market demand risk, industry rate adjustment risk, port integration falling short of expectations, risk of model assumptions and calculation errors, risk of untimely information data updates.