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China Merchants Port HLDGS: China / Hong Kong Company Guide
China Merchants Port HLDGS: China / Hong Kong Company Guide
China Merchants Port HLDGS: China / Hong Kong Company Guide
30.5
166 Where w e differ: We have not factored in any earnings or
146
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Company Guide
China Merchants Port Hldgs
doing so. With SIPG now being able to equity account for its 2015A 2016A 2017A 2018F 2019F
stake in Postal Savings Bank of China, it is expected to Share of Results of Associates and Jointly-Controlled Entities
continue recording an elevated level of profit, thereby 6,272
6,210
5,472
contributing to CM Ports’s bottom line as well. 5,290
5,018
4,034
3,686
F ocusing on growing overseas port investments to diversify and 3,763
ex pand its earnings base. The sale of its 24.5% stake in CIMC 2,509
to its parent for HK$8.5bn in 2017 and the impending sale of
its stake in Shenzhen Chiwan Wharf will provide CM Ports with 1,254
Lanka) and the Port of Newcastle (Australia) in the last 12 Operating Margin(%)
months, we believe more acquisitions could be on the cards as
40
it looks to further div ersify and grow its earnings base. 34.4
35 31.9 32.3 32.7
30 27.9
25
20
15
10
0
2015A 2016A 2017A 2018F 2019F
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Company Guide
China Merchants Port Hldgs
Balance Sheet:
St rong balance sheet. CM Ports’s net debt-to-equity stood at Leverage & Asset Turnover (x)
just 0.2x at the end of 2017 even after paying out an interim 0.45 0.1
0.40 0.1
div idend (interim plus special) of c. HK$5bn, and with an 0.1
0.35
announced sale of its stake in Shenzhen Chiwan Wharf for c. 0.30
0.1
rat e. While we have not assumed any future acquisition by the 8.0%
group, any value-accretive
acquisitions made could help the stock further re-rate. 6.0%
4.0%
China M erchants Port Holdings (CM Ports) is the largest public 13.4 Avg: 13.2x
port operator in China, with throughput volume of its 11.4
-1sd: 10.7x
inv ested terminals in Mainland China accounting for nearly 9.4
1.4
1.3
+2sd: 1.23x
1.2
0.8
-1sd: 0.83x
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Company Guide
China Merchants Port Hldgs
Key Assumptions
F Y D ec 2015A 2016A 2017A 2018F 2019F
Subsidiaries' Container Throughput ('000 TEUs) 13,710.0 14,374.0 15,848.0 15,536.3 15,742.0
Subsidiary Port Operations' Average ASP/TEU (HK$) 415.1 402.1 372.9 372.4 378.7
Associates and Jointly- Controlled Entities' Container Throughput ('000
22,053.0 24,820.0 26,846.0 27,866.6 28,939.0
TEUs)
Share of R esults of Associates and Jointly-Controlled Entities 4,034.0 3,686.0 5,472.0 6,209.9 5,290.2
Operating M argin(%) 34.4 31.9 27.9 32.3 32.7
Source: Company, DB S Vickers
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Company Guide
China Merchants Port Hldgs
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Company Guide
China Merchants Port Hldgs
Gr o w t h
R evenue Gth (%) (4.2) (5.7) (0.6) 5.4 12.3
Opg Prof it Gth (%) (2.8) (13.4) (6.5) 8.0 (18.8)
Net Prof it Gth (%) (14.7) (39.2) 87.7 86.3 (24.3)
M a rgins
Gross M argins (%) 42.4 42.7 41.5 43.5 36.2
Opg Prof it M argins (%) 31.0 34.8 29.2 35.7 21.1
Net Prof it M argins (%) 48.8 43.9 92.1 77.6 62.1
Source: Company, DB S Vickers
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Company Guide
China Merchants Port Hldgs
Mar-18
Jun-17
May-17
May-17
Sep-17
Apr-18
Apr-17
Jul-17
Jan-18
Nov-17
Feb-18
Oct-17
Aug-17
Source: DB S Vickers
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Company Guide
China Merchants Port Hldgs
DBSVHK recommendations are based an Absolute Total Return* Rating s ystem, defined as follows:
S TRONG BUY (>20% total return over the next 3 months, with identifiable s hare price catalysts within this time frame)
B U Y (>15% total return over the next 12 months for s mall caps, >10% for large caps)
H O LD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FU LLY VALUED (negative total return i.e. > -10% over the next 12 months)
S ELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
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Company Guide
China Merchants Port Hldgs
A N ALYST CERTIFICATION
The res earch analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that th e views about the
compa nies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his /her
compensation was, is, or will be, directly or indirectly, related to s pecific recommendations or views expre ssed in the report. The research analyst (s)
primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate 1 does not s erve as an officer of
the is s uer or the new listing applicant (which includes in the case of a real estate investment trus t, an officer of the management company of the
real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity wh o is responsible for the
management of the is suer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or
his associate does not have financial interests 2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
res earch reports. The research analyst(s) responsible for this report operates as part of a s eparate and independent team to the investment
banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the rese arch or investment
banking function is handled appropriately. There is no direct link of DBS Group's compensation to any s pecific investment banking function of the
DBS Group.
2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this
Res earch Report.
DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of s e curities
as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to
obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any s ecurity
dis cussed in this document s hould contact DBSVUSA exclusively.
1
An as s ociate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his s pouse, minor child (natural or adopted) or minor s tep-child, is a beneficiary or discretionary object; or (iii) another person
accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2
Financial interest is defined as interests that are commonly known financial interest, s uch as investment in th e s ecurities in respect of an issuer or a
new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term
does not include commercial lending conducted at arm's length, or i nvestments in any collective investment s cheme other than an issuer or new
lis ting applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new lis ting applicant.
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Company Guide
China Merchants Port Hldgs
R ESTRICTIONS ON DISTRIBUTION
Ge neral This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, s tate, country or other jurisdiction where s uch distribution, publication, availability or us e would be
contrary to law or regulation.
A us tralia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
(“DBSVS”). DBS holds Australian Financial Services Licence no. 475946.
DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001
(“CA”) in respect of financial s ervices provided to the recipients . Both DBS and DBSVS are regulated by the Monetary
Authority of Singapore under the laws of Singapore, and DBSVHK is regulated by the Securities and Futures Commission of
Hong Kong under the laws of Hong Kong, which differ from Australian laws.
Dis tribution of this report is intended only for “wholesale investors” within the meaning of the CA.
H o ng Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong)
Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the
regulated activity of advising on securities.
I ndonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.
M alaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advise d
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and as sociated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the s ecurities mentioned herein and may also perform or seek
to perform broking, investment banking/corporate advisory and other s ervices for the s ubject companies. They may also
have received compensation and/or s eek to obtain compensation for broking, investment banking/corporate advisory and
other s ervices from the subject companies.
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Company Guide
China Merchants Port Hldgs
U nited Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined
Em irates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes
only and should not be relied upon or acted on by the recipient or considered as a s olicitation or inducement to buy or s ell
any financial product. It does not constitute a personal recommendation or take into account the particular investment
objectives, financial situation, or needs of individual clients. You s hould contact your relationship manager or investment
adviser if you need advice on the merits of buying, s elling or holding a particular investment. You s hould note that the
information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This
report or any portion thereof may not be reprinted, s old or redistributed without our written consent.
U nited States This report was prepared by DBSVHK. DBSVUSA did not participate in its preparation. The research analyst(s) named on
this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research
analyst(s) are not s ubject to FINRA Rule 2241 restricti ons on analyst compensation, communications with a s ubject company,
public appearances and trading s ecurities held by a research analyst. This report is being distributed in the United States by
DBSVUSA, which accepts responsibility for its contents . This report may only be distributed to Major U.S. Institutional
Investors (as defined in SEC Rule 15a-6) and to s uch other institutional investors and qualified persons as DBSVUSA may
authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein s hould
contact DBSVUSA directly and not its affiliate.
O ther In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
j urisdictions profes sional, institutional or s ophisticated investors as defined in the laws and regulations of s uch jurisdictions.
D BS Vickers (Hong Kong) Limited
18 th Floor Man Yee building, 68 Des Voeux Road Central, Central, Hong Kong
Tel: (852) 2820-4888, Fax: (852) 2868-1523
Company Regn. No. 31758
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Company Guide
China Merchants Port Hldgs
I N DONESIA TH AILAND
PT DBS Vickers Sekuritas (Indonesia) D BS Vickers Securities (Thailand) Co Ltd
C o ntact: Maynard Priajaya Arif C o ntact: Chanpen Sirithanarattanakul
DBS Bank Tower 989 Siam Piwat Tower Building,
Ciputra World 1, 32/F 9th, 14th-15th Floor
Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan,
Jakarta 12940, Indonesia Bangkok Thailand 10330
Tel: 62 21 3003 4900 Tel. 66 2 857 7831
Fax: 6221 3003 4943 Fax: 66 2 658 1269
e-mail: research@id.dbsvickers.com e -mail: research@th.dbs.com
Company Regn. No 0105539127012
Securities and Exchange Commission, Thailand
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