Excluding the impact of trade, revenue rose 0.7 per cent year-on-year in the first three quarters of 2015. The increase is mainly due to the increase in revenue from the oil handling business caused by the increase in oil throughput. However, the increase in income was affected by the decline in the throughput of bulk and ore terminals, which also affected gross profit margins. During the period, gross profit margin fell 3.0 percentage points year-on-year to 16.6%. Net profit in the first three quarters of 2015 fell 11.3 per cent from a year earlier to 371 million yuan.

The oil terminal is expected to remain robust in 2015 and 2016. On the other hand, ore and food terminals are expected to remain weak; container terminal throughput is expected to show low growth. Overall, we slightly adjusted our 2015-2017 revenue forecasts and lowered our 2015-2017 net profit forecasts by 15.8%, 24.0% and 25.1% to reflect the weak performance of bulk grain terminals and ore terminals.

The planned new H shares will dilute earnings per share by about 20 per cent. After lowering the profit forecast, we believe that the current valuation of the company is too high. However, the current H-share price of the company is equivalent to a 67% discount to its A-share price, and we think the H-share price will be supported to some extent. Therefore, we maintain the investment rating "neutral". However, we lowered our target price to HK $2.50 to reflect the downward profit forecast. The updated target price is equivalent to 22.6 times, 24.0 times and 22.5 times 2015-2017 earnings, or 0.7 times 2015 price-to-book ratio.