Main points of investment
The company operates the traditional coal port and has made great efforts to expand its ore business in recent years. Qin Gang shares were listed on the Hong Kong Stock Exchange in 2013, and the controlling shareholder is Hebei Port Group, which holds 61.11%. The actual control is Hebei SASAC Company, which is mainly responsible for cargo loading and unloading, storage, warehousing, transportation and logistics, including coal, metal ores, oil products and liquid chemicals, containers and other groceries. Based on the operation of domestic trade coal business in Qinhuangdao Port, the company has expanded its business scope to Caofeidian Port area of Tangshan Port and Comprehensive Port area of Cangzhou Huanghua Port through investment in recent years.
The company's coal business volume and price fell in 2016, the performance dropped sharply, and the coal business volume and price resumed in the first quarter of 2017. In 16 years, the company's net profit was 372 million yuan, down 72.4% from the same period last year. The sharp decline in performance was mainly affected by the decline in both volume and price of coal business. The company's throughput rebounded by 36.7% in the first quarter of 2017 compared with the same period last year. The company and other ports around the Bohai Sea also cancelled price concessions and restored rates.
Coal business: it is expected to rebound sharply in 2017, and the medium-and long-term pressure remains. It is expected that the volume and price recovery of coal performance in 2017 will lead to a sharp rebound in performance. In the medium and long term, due to factors such as the substitution effect of clean energy and ultra-high pressure planning and construction, it is expected that the medium-and long-term transport demand for coal will not increase; while the expansion and transformation of railway trunk and branch lines such as the Shuohuang Line, the Zhangtang Line, and the Jinzhong-South Corridor have made the railway capacity more relaxed, the coal transport pattern has changed, and the diversion pressure on the surrounding ports has increased sharply.
Ore business: the development of Huanghua Port is expected to bring new profit growth points. In the first quarter of 16 and 17, the demand for iron ore imports picked up sharply. The company's iron ore business is mainly operated in Caofeidian Port area and Huanghua Port area, the operation of Caofeidian Port area is mature, the company continues to invest in the construction of iron ore special wharf in Huanghua Port area, and the development momentum is good, which is expected to bring new profit growth points.
Profit forecast and rating. It is estimated that the return net profit of the company from 2017 to 2019 is 12.6,13 and 1.31 billion yuan, equivalent to 0.25,0.26,0.26 yuan (EPS). At present, the stock price is 8.5,8.3,8.2 times corresponding to PE and 0.85 times corresponding to 17-year PB. For the first time, the "overweight" rating is given, with a target price of HK $2.80, corresponding to 10 times PE for 17 years, assuming a 17-year dividend ratio of 60 per cent and a corresponding dividend yield of 6 per cent.
Risk hint. Lower throughput than expected; vicious competition among ports around the Bohai Sea; substantial diversion of surrounding ports