Main points of investment:
Event: Shanghai Hong Kong Group released its 2021 results KuaiBao. The total revenue of the company in 2021 was 34.38 billion yuan, an increase of 31.6% over the same period last year. The net profit was 14.5 billion yuan, an increase of 74.5% over the same period last year. That's what we expected.
The company's main port business has achieved great growth. Volume: in 2021, the container throughput of Shanghai Port Group was 47.033 million TEUs, an increase of 8.1% over the same period last year, and the cargo throughput was 540 million tons, an increase of 5.7% over the same period last year. Price: the consolidation boom is higher than expected, the proportion of heavy containers in the container throughput structure increases, the port preference decreases, and the revenue per container increases.
Subsidiary Jinjiang Shipping's net profit has increased significantly and is to be spun off and listed on the stock market. Jinjiang Shipping is mainly engaged in international container transportation, shipping professional services and shipping logistics business. Shanghai Hong Kong Group directly holds 98 per cent of the shares and indirectly holds 100 per cent. According to the company announcement, the split will not cause the company to lose control over Jinjiang Shipping and will not have a material impact on the continuous operation of other business sectors of the company. The operating income of Jinjiang Shipping from 2018 to 2020 is 38.76,52.83 and 5.149 billion yuan respectively, and the net profit is 2.71,3.95 and 398 million yuan respectively. In the first three quarters of 2021, the cumulative operating income is 6.578 billion yuan and the net profit is 903 million yuan. It is expected that this year's operating income and net profit will increase significantly compared with the same period last year.
According to the announcement, Orient Overseas (00316.HK), the shipping company controlled by the company and the shipping company in which the company has a stake, is expected to see a substantial increase in profits. The company's subsidiary companies, Shanghai Group Ruitai Development Co., Ltd., and Shanghai Group Ruixiang Real Estate Development Co., Ltd., have increased their real estate sales profits.
To reiterate the investment opportunities of Shanghai Port Group: (1) the recent port policy tends to improve marginally, and the port rates of Ningbo Port and Guangzhou Port are raised. (2) the port is a high-quality infrastructure asset with heavy assets and low marginal cost, which has no useful life and charges overseas. It has entered the stage of capital expenditure downward and capacity utilization rebounding ROE upward. (3) the regional integration of the port is over, and the competition pattern is significantly improved. (4) reviewing the history, the shipping scene will be transmitted to the port, and the value of the port will enter the stage of revaluation.
Slightly adjust the earnings forecast to reiterate the "buy" rating. The company's 2021 performance KuaiBao was in line with expectations, and the port's main business continued to improve in the fourth quarter; according to the wind consensus forecast, the company's investment income increased slightly. As a result, we have adjusted our profit forecasts slightly. Under neutral expectations, the port rates of Shanghai Port Group will rise by 10% year by year from 2022 to 2023, returning to the 2017 level. After adjustment, the net profit of 2021E-2023E of Shanghai Port Group is 144.99 yuan, 153.88 yuan and 17.269 billion yuan (the original value is 145.88 yuan, 153.83 yuan and 17.13 billion yuan). The corresponding net profit growth rate is 74.5%, 6.1% and 12.2%, and the corresponding PE is 10, 9 and 8 times. As a leading port, the valuation of Shanghai Port Group is lower than the industry average. Using the segment valuation method, taking into account the increase in the market value of investment assets and the improvement in the valuation of port business FCFF, after adjustment, on January 13, 2022, the valuation of Shanghai Port Group is 281.1 billion yuan (the original value is 268.9 billion yuan), and there is enough room for valuation and repair. Reiterate the "buy" rating.
Risk hint: the global economy continues to decline, the port rate headwind policy continues, and the shipping boom is lower than expected.
