The performance in 2020 is in line with our expectations; the Port Business Prospect in 2021 releases the 2020 annual report to good Tangshan Port: 1) the operating income decreased by 30.1% to 7.84 billion yuan compared with the same period last year; 2) the net profit of returning home increased by 3.7% to 1.84 billion yuan compared with the same period last year. Basically in line with our expectations (1.87 billion yuan); 3) deducting non-homed net profit increased by 0.5% to 1.78 billion yuan compared with the same period last year. The sharp decrease in revenue from the same period last year was mainly due to the decrease in revenue from the company's commodity sales business; at the same time, the company's operating costs decreased by 37.8% compared with In 2020, the company completed cargo throughput of 250 million tons, an increase of 2.7% over the same period last year. We expect that with the gradual normalization of economic production in 2021, the company's port throughput will maintain a good growth rate. We maintain the 2021 PE net profit forecast of 2.05 billion / 2.13 billion yuan in 2022 and increase the 2023 forecast by 2.23 billion yuan. Based on the 8.9 x 2021E net profit estimate, we raise the target price to 3.08 yuan and maintain the "overweight" rating.
Gross profit of loading and unloading and storage business declined compared with the same period last year.
In 2020, the ore / coal / steel throughput of Tangshan Port was 110 million tons / 74.99 million tons / 13.36 million tons respectively, with a year-on-year performance of + 6.3%, 10.4% and 8.3%. The year-on-year increase in ore throughput was mainly due to a rebound in domestic infrastructure and real estate investment, a decline in coal throughput affected by foreign trade import policies, and a decline in steel exports affected by depressed demand in overseas markets. Overall, the company's port handling and storage business achieved operating income of 4.49 billion yuan, down 6.9% from the same period last year, and gross profit of 2.02 billion yuan, down 12.9% from the same period last year.
Revenue from commodity sales declined, but gross profit increased compared with the same period last year.
The company's commodity sales business achieved operating income of 2.89 billion yuan in 2020, down 43.7% from the same period last year; operating cost 2.76 billion yuan, down 46.2% from the same period last year; gross profit increased significantly to 140 million yuan (12.18 million yuan in the same period last year); gross profit margin 4.7% (0.2% in the same period last year). The company's commodity sales business is affected by commodity market demand and prices. Demand for commodities was weak in the first half of 2020 as a result of the epidemic; since the second half of the year demand has gradually recovered and benefited from rising commodity prices.
With the gradual repair of the global economy, the port business is expected to maintain a good trend in 2021. In the first half of 2020, the company's business is affected by the epidemic, which is a drag on its performance. Among them, 1H20's non-home profit fell 0.9% to 860 million yuan compared with the same period last year; with the rebound in demand in the second half of 2020, the company's business gradually improved. We expect to benefit from the gradual popularization of vaccines and the gradual recovery of global economic production in 2021, and the company's port throughput will continue to improve. Our target price of 3.08 yuan is based on 8.9 x 2021E PE (the average PE over the three years of the company's history is 10.0x minus 0.5 standard deviation, 2021E EPS 0.35 yuan; the previous target price is 2.72 yuan, based on 8.5 x 2020E PE).
Risk tips: 1) the growth rate of cargo throughput is lower than expected; 2) the duration of the epidemic is longer than expected; 3) natural disasters; 4) policy risks.
