Overview of events
On August 26, 2020, the company released a semi-annual report that the company achieved 1.45 billion yuan in revenue in the first half of 2020,-2.78% last year, 129 million yuan in net profit, + 5.90% in the same period last year, and 124 million yuan in net profit after deducting non-return, + 6.31% in the same period last year.
Revenue from major industries such as port operations and logistics services grew steadily, while revenue from trade businesses with low gross profit margin and gross margin decreased, dragging down 2020H1 revenue from the same period last year.
Port operation business: in the context of the depressed demand of H1 affected by the COVID-19 epidemic in 2020, the company's Yunfu New Port, Wuzhou Port and Guiping Xinlong Wharf have adopted measures such as enriching the types of goods, actively expanding the "scattered collection" business, strengthening market development, and strengthening cooperation with major shipping companies. The throughput and income have achieved positive growth, of which the domestic trade cargo throughput of Yunfu New Port is + 29% compared with the same period last year. The cargo throughput of Guiping Xinlong terminal is + 39.4% year on year, and the container throughput is + 123% year on year. During the reporting period, the company's port operation income was 35.759 million yuan, + 3.97% compared with the same period last year.
In terms of logistics and transport business: in 2020, H1 Company built and purchased ships were put into use. By the end of June 2020, its own transport capacity reached 160000 tons, with a total control capacity of more than 1 million tons. At the same time, the company continued to strengthen inland river and coastal bulk cargo business expansion and the introduction of strategic customers, bulk cargo transport volume increased by 50% in the first half of the year compared with the same period last year. During the reporting period, the company's logistics service business income was 366 million yuan, + 17.52% compared with the same period last year.
In terms of energy and environmental protection business: in 2020, the six wind farms under the power sector of H1 Company achieved 274 million kilowatt-hours of electricity generation and stable production and operation; by the end of June 2020, the subsidiary Gangxing Gas had built and ventilated a total of about 296km of municipal gas pipelines, 190 industrial and commercial users, about 165000 residential users, and gas sales in the first half of the year were about 3748 million square meters, an increase of 29.24% over the same period last year. During the reporting period, the company's energy and environmental protection business income was 246 million yuan, + 8.38% compared with the same period last year.
During the reporting period, the company's gross profit margin and gross profit accounted for a relatively low revenue from the trade business decreased compared with the same period last year, of which the logistics trade business income was 544 million yuan (gross profit margin 0.97%, gross profit accounted for 2.3%),-3.87% compared with the same period last year; import and export business income was 0 yuan (2019H1 income 80 million yuan, 2019 gross profit margin was 0.01%), dragging down the current revenue year-on-year.
The expense rate is stable, and the increase in investment income in the energy and environmental protection sector promotes the company's performance growth compared with the same period last year.
During the reporting period, the company's sales expenses, management expenses and financial expenses were RMB 0.41 billion, respectively, compared with the same period last year, which were-2.18%, 1.7% and 3.4%, respectively, and accounted for 2.9%, 5.1% and 3.4% of operating income, respectively, and the expense rate was stable.
During the reporting period, the company achieved an investment income of 97 million yuan, an increase of 13 million yuan over the same period last year, and + 15% over the same period last year. The investment income accounts for about 63.6% of the company's total profits, mainly the long-term equity investment income of Guangzhu Power Generation, CNOOC Zhuhai Gas and Power dividends, as well as associated companies such as Sinochem Zhuhai and Xinyuan Thermal Power. Judging from historical data, the proportion of investment income to total profits in 2017-19 is 44.4% / 47.5% / 54.6% respectively. Although the performance of participating companies such as Guangzhu Power Generation and CNOOC Zhuhai Gas Power has fluctuated, the contribution of investment income to the company's performance has increased year by year.
During the reporting period, the company announced that it intends to acquire 100% stake in Xinghua Port. In the future, the port and shipping business may be expanded to the economically developed Yangtze River Delta region. If the acquisition is successfully completed, the two port operations are expected to achieve linkage. For the company's shipping, freight forwarders, tally, tugs and other port supporting services to bring new business increment.
On July 29, 2020, the company issued an announcement that the company's wholly-owned subsidiary intends to make a comprehensive offer to acquire 100% of Xinghua Port, a Hong Kong listed company. Through all the shareholders of Zhuhai Port Hong Kong Co., Ltd., Xinghua Port Holdings Co., Ltd., the company intends to launch a voluntary conditional comprehensive cash offer to acquire 100% of Xinghua Port shares with a cash offer.
Xinghua Port is mainly engaged in the loading and unloading business of Xinghua Port in Changshu and Changshu Yangtze River Port. The goods are mainly pulp and paper rolls, steel, logs, machinery and equipment. Pulp is also the dominant product of Gaolan home port in Zhuhai. We believe that after the company's layout of Xinghua Port in the Yangtze River Basin, it will be able to rely on the 150,000-ton berth of Gaolan Port and its own 20,000-ton ship capacity, and the business linkage between Gaolan Deepwater Port and Xinghua Port is expected to be realized. in the future, it will increase the business opportunities for Gaolan mother port to distribute imported pulp and other goods to Xinghua Port, which will bring new business increment to the company's port supporting services such as shipping, freight forwarder, tally, tugboat, etc.
Investment advice: maintain the company's profit forecast and maintain a "buy" rating.
As the company's 100% equity offer for Xinghua Port has not been completed, it is difficult to accurately predict the impact on the company's performance. Without considering this acquisition for the time being, we maintain the profit forecast for the company's 2020-22 return net profit of 2.3 billion yuan, respectively, which corresponds to an EPS of 0.25, 0.29, 0.31 yuan, according to the closing price of 5.87 yuan per share on August 27, 2020. The corresponding PE is 23.54, 20.20, 19.04 times, respectively.
Maintain a "buy" rating.
Risk hint
Macroeconomic downside may exceed expectations; Xinghua Port equity acquisition; epidemic duration; resumption progress.