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[Table_Title] Company Report: COSCO Shipping Ports (01199 HK) Spencer Fan 范明

(86755) 2397 6686

公司报告：中远海运港口 (01199 HK) [email protected]

7 November 2018

[Table_Summary] Synergy Creates New Growth, Maintain "Accumulate" 协同带来新增长，维持“收集” Good performance in 1-3Q18 and unaffected by external turbulence.

1-3Q18 revenue/ adjusted shareholders’ profit rose 73.5% YoY/ 46.6% YoY.

With only one U.S terminal, CSP has been less affected by the Sino-U.S.

trade dispute. 1-3Q18 throughput of the Seattle terminal occupied only

0.71%/ 0.15% of CSP’s overseas/ total throughput, which was insignificant.

CSP's future key driving factor could be the incremental volume

contribution by OCEAN Alliance. In 3Q18, OCEAN Alliance contributed

about 63.4% of CSP’s total throughput, while the management expects the

ratio to be higher in the future. OOCL contributed 2.1%/ 2.3% of CSP's

throughput in 1H18/ 3Q18, while OOCL officially became a subsidiary of

parent company CSH in August 2018, which is beneficial for CSP.

Incremental growth has been seen in Pireaus and Xiamen's operating results.

Overseas contribution on OCEAN Alliance routes is worth the

anticipation. With Turkey's Kumport being CSP's 1H18 overseas highlight,

the upcoming Abu Dhabi port might be another connecting hub along OCEAN

Alliance's Far East-Europe route in 2019. This greenfield project has an

annual designed capacity of 2.5 mn TEU. So far, OCEAN Alliance's current

shipping volume in the Persian Gulf has reached 3.0 mn TEU by3Q18.

Maintain "Accumulate" rating and revise up TP to HK$9.25. State

Council's new logistics policy in October 2018 may put pressure on the port

industry's revenue, yet we favor CSP’s growth potential amid secured volume

from OCEAN Alliance and enhancing operating efficiency. Current valuation

is attractive. Our TP represents 12.3x, 10.1x and 8.6x 2018-2020 PER.

2018 年前三季度表现良好，受外部波动影响较小。前三季度收入/经调整净利润分别同比

上升 73.5%/46.6%。因仅有一个美国码头，中远海运港口受中美贸易战影响较小。西雅图

码头前三季度吞吐量仅分别占公司海外/全部吞吐量的 0.71%/0.15%，并不显著。

公司未来的核心驱动因素来自于海洋联盟带来的增量箱量。2018 年第三季度海洋联盟贡

献了公司 63.4%吞吐量，而管理层预计该比例将会更高。东方海外分别贡献公司上半年/

三季度 2.1%/2.3%吞吐量，而东方海外在 2018 年 8 月份也正式成为母公司中远海控子公

司，对公司构成利好。相关的增量箱量已经可在比埃雷夫斯和厦门远海的表现当中看见。

海洋联盟航线上的海外码头值得期待。2018 上半年土耳其的昆波特港为中远海运港口的

海外经营亮点，而我们预计 2019 年即将投产的阿布扎比港有望成为海洋联盟远东-欧洲航

线上的另一个衔接枢纽。这个待开发的码头项目具备设计年吞吐量 250 万标箱的产能。截

至 2018 年 9 月底，海洋联盟在波斯湾区域内的集箱运输量已达到 300 万标箱。

维持“收集”评级并上调目标价至 9.25 港元。国务院 2018 年 10 月的物流新政可能对港口

收入施压，而我们仍看好公司在海洋联盟流量保障和经营效率提升背景下增长潜力。公司

目前估值水平吸引。我们的目标价对应 12.3 倍、10.1 倍及 8.6 倍的 2018-2020 年市盈率。

[Table_Rank] Rating: Accumulate Maintained

评级：收集 (维持)

[Table_Price] 6-18m TP 目标价: HK$9.25 Revised from 原目标价: HK$9.00

Share price 股价: HK$7.960

Stock performance

股价表现

[Table_QuotePic]

[Table_PriceChange] Change in Share Price

股价变动

1 M

1 个月

3 M

3 个月

1 Y

1 年

Abs. % 绝对变动 %

(4.8) 8.7 (12.0)

Rel. % to HS Index 相对恒指变动 %

(3.1) 14.8 (3.4)

Avg. Share price(HK$) 平均股价（港元）

8.1 7.9 7.6

Source: Bloomberg, Guotai Junan International.

[Table_Profit] Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE

年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率

12/31 (US$ m) (US$ m) (US$) (△ %) (x) (US$) (x) (US$) (%) (%)

2016A 556 247 0.083 (43.2) 12.4 1.466 0.7 0.033 3.2 4.8

2017A 635 512 0.169 103.6 6.0 1.697 0.6 0.030 2.9 10.7

2018F 901 299 0.096 (43.2) 10.6 1.736 0.6 0.027 2.7 5.6

2019F 1,051 363 0.117 21.9 8.7 1.823 0.6 0.032 3.2 6.6

2020F 1,176 429 0.138 17.9 7.4 1.927 0.5 0.038 3.7 7.3

[Table_BaseData] Shares in issue (m) 总股数 (m) 3,113.1 Major shareholder 大股东 COSCO SHIPPING Holdings 45.3%

Market cap. (HK$ m) 市值 (HK$ m) 24,780.3 Free float (%) 自由流通比率 (%) 54.7

3 month average vol. 3 个月平均成交股数 (‘000) 4,491.9 FY18 Net gearing (%) FY18 净负债/股东资金 (%) 32.3

52 Weeks high/low (HK$) 52 周高/低 (HK$) 9.180 / 6.330 FY18 Est. NAV (HK$) FY18 每股估值（港元） 13.8

Source: the Company, Guotai Junan International.

(35.0)

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Nov/17 Feb/18 May/18 Aug/18 Oct/18

% of return

HSI index COSCO SHIPPING PORTS

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[Table_PageHeader] COSCO Shipping Ports (01199 HK)

1-3Q18 results demonstrated good performance while COSCO Shipping Ports' ("CSP" or the "Company") business was

less affected by the ongoing Sino-U.S. trade dispute. For 1-3Q18, CSP’s revenue was US$748.4 mn, up 73.5% YoY; gross

profit was US$233 mn, up 50.2%; and adjusted shareholders’ profit was US$244.1 mn, up 46.6% YoY, in line with the market’s

and our forecast. 3Q18 revenue rose 62.6% YoY to US$253.0 mn, while shareholders’ profit increased 11.8% YoY to US$75.1

mn, also in line with our expectation. For 1-3Q18, CSP's total throughput rose 20.6% YoY to 87.518 mn TEU (up 11.8% YoY to

73.168 mn TEU excluding Qingdao Port, "QPI"). For 3Q18, CSP's throughput rose 11.1% YoY to 30.812 mn TEU (up 11.8% YoY

to 25.841 mn TEU excluding QPI), missing our expectation slightly. In September 2018, China's YTD/ monthly export (US$)

increased 12.2% YoY/ 14.5% YoY, while domestic YTD/ monthly imports (US$) increased 20.0% YoY/ 14.3% YoY. Considering

China/ U.S merchandisers' advanced shipments during September (before the second round of tariffs from the U.S. on US$200

bn Chinese goods came into effect), the real impact of the Sino-U.S. trade war might not be fully seen until 4Q18/ 1Q19. In fact,

CSP's volume relating to the U.S. is relatively small, and has been less affected by the ongoing Sino-U.S. trade dispute. In fact,

most of CSP’s overseas ports are located in Europe, Southeast Asia, and the Middle East. CSP's only U.S. based terminal is the

Seattle terminal. CSP's operating volume on U.S. routes has been the lowest industry-wide (8.0% of the entire China-U.S.

shippment box volume). In 1-3Q18, the Seattle terminal's throughput was 131.9 thousand TEU, accounting for 0.71%/ 0.15% of

CSP's 1-3Q18 overseas/ total throughput, respectively. Considering the insignificance of its U.S. port, CSP will hardly be affected

by the Sino-U.S. trade friction.

Figure-1: CSP’s Monthly Throughput and YoY Growth Figure-2: Monthly Regional Throughput and YoY Growth

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Figure-3: Monthly Throughput And YoY Growth From

Key Terminals In the Yangtze River Region

Figure-4: Monthly Throughput And YoY Growth From

CSP’s Key Terminals In Southern Regions


Key driving factors in 4Q18 and 2019 could derive from volume contribution of OCEAN Alliance (members include

parent company "COSCO SHIPPING Holdings, CSH"). In 3Q18, throughput from subsidiary terminals rose 33.0% YoY to

5.794 mn TEU, accounting for 18.8% of the quarterly total. Throughput from non-controlling terminals rose 7.0% YoY to 25.018

mn TEU, representing 84.7% of CSP's quarterly total, underperforming its subsidiaries' results. In 3Q18, OCEAN Alliance

contributed 63.4% of CSP's total throughput, while the management expects more to come in 4Q18 and 2019. Noticeably,

OCEAN Alliance member OOCL (00316 HK) was officially acquired by CSH in August 2018. OOCL contributed 2.1%/ 2.3% of

CSP's 1H18/ 3Q18 throughput, while OOCL is likely to coordinate with parent company CSH to allocate more routes to CSP

ports starting 4Q18. Regarding profitability, 1H18 profit from CSP’s subsidiaries was mainly attributable to Piraeus terminal in

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Greece and Xiamen Ocean Gate terminal ("XOGT"), both having OCEAN Alliance as their single largest customer. Piraeus

terminal's 1H18 profit was US$13.64 mn, up 25.8% YoY (highest among CSP’s subsidiary terminals) due to support from

OCEAN Alliance and appreciation of the Euro in 1H18. Besides raising stevedoring charges, Piraeus' throughput growth might

also accelerate in 4Q18 as we expect OCEAN Alliance to relocate more routes via Piraeus after CSH and other alliance

members' routes are reshuffled. Meanwhile, XOGT recorded terminal profit of US$10.148 mn for 1H18. As OCEAN Alliance

increased calling volume at XOGT, the terminal's throughput in 1-3Q18 surged 43.1% YoY to 1,502.9 thousand TEU. Benefiting

from additions of another OCEAN Alliance route originating from South Korea starting October 2018, as well as XOGT’s maturing

automated terminal vehicle system, XOGT is estimated to have higher throughput in 2H18 than in 1H18. We estimate XOGT's

overall YoY throughput growth to score between 45.0% and 50.0% for 2018. Similar logic may apply to other subsidiaries

covered by OCEAN Alliance/ CSH, while these ports may also benefit from CSH and OCEAN Alliance’s support volume in the

near future.

Figure-5: Parent Company’s YTD Transport Volume Figure-6: OCEAN Alliance’s Contributed Throughput

Source: COSCO SHIPPING Holdings (601919 SH / 01919 HK), Guotai Junan International.

Source: the Company, Guotai Junan International. *: Note: As CSP's non-OCEAN Alliance throughput surged during 3Q18, OCEAN Alliance's throughput share declined proportionally in 3Q18, while we expect OCEAN Alliance's share to pick up soon in the future.

Particularly, incremental contribution from overseas subsidiaries along OCEAN Alliance routes is worth anticipating. By

3Q18, around 90% of CSP's port operating capacity was located in mainland China, while most domestic ports were

non-subsidiaries (most subsidiaries located in Europe). For their next strategy, CSP's management plans to focus on exploring

overseas opportunities by investing more in subsidiary terminals. In our view, Sino-Europe trade will be continually emphasized

under the background of the Sino-U.S. trade war, and we expect CSP to boost volume for overseas subsidiaries. CSP's 1H18

overseas highlights was Turkey’s Kumport, while 1-3Q18 throughput recorded YoY growth of 29.1% to 968,925 TEU, as the new

shipping lines started to call at Kumport. Also, in accordance with the investment incentive policy newly introduced in Turkey,

Kumport Terminal successfully applied for income tax exemption starting from Feb 2018. Kumport's 1H18 profit was US$10.88

mn, up 150.0% YoY. For 2019, we favor CSP's incremental volume growth along the Far East - Europe shipping route. While

more synergy could be brought by OCEAN Alliance, the Abu Dhabi terminal might become CSP’s next overseas growth engine.

This terminal will start trial operations by the end of December 2018, and will officially commence operations in March 2019 with

an annual designed capacity of 2.5 mn TEU. This subsidiary is of great significance for CSP to build its strategic hub connecting

Asia and Europe. From our calculation, OCEAN Alliance's shipping volume in the Persian Gulf has already reached 3 mn TEU as

at the end of September 2018. Between Pireaus (Greece)/ Vado (Italty)/ NPH (Spain)/ Zeebrugge (Belgium) and China, CSP is

likely to add an Abu Dhabi terminal as its transfer hub-port to engage with OCEAN Alliance’s operations by creating more

synergies along OCEAN Alliance's underlying routes. Conservatively, we estimate 2019 throughput at Abu Dhabi ports (as its first

year) to reach 1.5 mn TEU, with 50%’s capacity utilization rate.

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Figure-7: CSP's 2018-2020 Revenue Estimates Figure-8: CSP's 2018-2020 Net Profit Estimates


Recent industry policy may put pressure on CSP's revenue, yet we expect CSP to maintain stable revenue/ profit growth

due to its enhancing operations. In October 2018, the State Council stipulated that all localities must disclose publicly a list of

charges from corresponding local ports and reduce logistics costs of foreign trade boxes by more than US$100 per box. From our

understanding, the targeted US$100/box cost cut will not only be reflected in handling fees, but also in cutting transportation

logistics collection fees, port inspection fees and other charges. In the long run, we expect CSP's domestic terminals to remain

competitive despite China’s overall trend of port handling fee reductions. An objective of the State Council was to promote foreign

trade amid Sino-U.S. trade tension, aiming to boost up cargo volume. For CSP, most of its domestic ports (subsidiary and

non-subsidiary) are located in core export locations and serve as regional hubs, and are affected by the government's fee cut

policies. Yet the increased containers volume driven by OCEAN Alliance/ newly opened ports could offset impact of fee

reductions for CSP. Additionally, CSP has been exploring new opportunities recently. CSP plans to extend business to upstream

and downstream chains by deploying within the logistics real estate sector. We expect CSP to strengthen storage facilities

investments around its port zones (e.g. Guangzhou and Shenzhen). The management expects CSP's revenue share from

warehouse logistics sector to reach 5.0% by 2021. On the other hand, trainings on CSH's new Navis N4 system (a world leading

shipping-port operating system) for CSP staff has been proceeding smoothly in order to let CSP staff better prepare for the

full-scale deployment of the N4 system in subsidiary terminals. The Navis N4 system will swiftly dock the shipping systems

adopted by CSH (using Navis N6, which has a similar algorithm to the N4) and OOCL (using Navis N4, the same as CSP).

Therefore, CSP's terminal operating efficiency is likely to improve in 2019. Externally, the Sino-U.S. trade war will not have a

material impact on the Company's profitability. Overall, we revise CSP's 2018-2020 net profit estimates by 0.1%, 2.1% and -5.0%.

Also, we adjust our 2018-2020 EPS estimates by -1.7%, 0.2%, -6.7%. Corresponding EPS is US$0.096, US$0.117, and

US$0.138, respectively, reflecting YoY change of -43.2%, 21.9% and 17.9%. Excluding one-off disposal/ revaluation gains' such

as the impact from QPI in 2017, projected EPS YoY changes for 2018-2020 are 57.3%, 21.4%, 18.1%, respectively.

Table-1: Changes in CSP Earnings Estimates

US$ mn 2018F 2019F 2020F

New Estimates

Revenue 901 1,051 1,176

Operating profit 142 193 242

Net profit 299 363 429

EPS (US$) 0.096 0.117 0.138

ROE 5.6% 6.6% 7.3%

Old Estimates

Revenue 746 877 1,025

Operating profit 129 199 299

Net profit 299 356 451

EPS (US$) 0.098 0.116 0.148

ROE 5.6% 6.4% 7.7%

Changes

Revenue 20.7% 19.8% 14.7%

Operating profit 9.6% -2.6% -19.1%

Net profit 0.1% 2.1% -5.0%

EPS (US$) -1.7% 0.2% -6.7%

ROE (ppts) 0.005 0.129 (0.381) Source: Guotai Junan International.

554 635

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2016A 2017A 2018F 2019F 2020F

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Figure-9: YTD Trade Growth in China (US$) Figure-10: Monthly Trade Growth in China (US$)

Source: General Administration of Customs, Guotai Junan International. Source: General Administration of Customs, Guotai Junan International.

Maintain "Accumulate" rating and adjust TP up to HK$9.25 to reflect CSP’s valuation potential. Escalation of the Sino-U.S.

trade war may directly affect overall throughput of domestic ports, yet our view on CSP's long-term fundamentals remains

optimistic and unaffected by recent market volatility. Long-term synergy effects with CSH/ OOCL and other members of OCEAN

Alliance will be seen in 4Q18 and 2019. As mentioned, positive signs have been found in subsidiaries under OCEAN Alliance

coverage after route reshuffling (e.g. Piraeus/XOGT). The Company’s overseas terminals (Piraeus, Zeebrugge and potentially

Abu Dhabi) will benefit from the OCEAN alliance's increasing calling volume. We have reviewed the investment logic of the port

industry and believe that CSP may replace China Merchants Port (00144 HK, "Accumulate") as the industry leader and enjoy a

higher valuation premium among HK listed port peers. Our revised TP represents 12.3x, 10.1x and 8.6x 2018-2020 PER.

Major risks: 1. weak marine trade in 4Q18 and beyond amid escalating Sino-U.S trade friction, and 2. full-scale execution of

price cut guidance for terminal handling fees requested by the State Council.

Table-2: Peers Comparison

Company Stock Code Currency Last price PE

PB

ROE(%)

D/Y(%)

EV/EBITDA

ROA(%)

17A 18F 19F 20F 17A 18F 19F 20F 18F 18F 18F 18F

HK - Listed Companies

China Merchants Port Holding 144 HK HKD 13.88

7.5 9.1 7.7 6.0 0.6 0.6 0.6 0.4

5.6

8.2

14.8

3.9

Cosco Shipping Ports Ltd 1199 HK HKD 7.96

6.0 10.6 8.7 7.4 0.6 0.6 0.6 0.5

5.6

2.7

19.7

3.9

Dalian Port (Pda) Co Ltd-H 2880 HK HKD 1.07

23.2 n.a. n.a. n.a. 0.6 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Tianjin Port Dvlp Hlds Ltd 3382 HK HKD 0.84

6.7 n.a. n.a. n.a. 0.4 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Xiamen International Port-H 3378 HK HKD 1.08

6.5 8.3 6.1 5.7

0.5 0.5 0.5 0.4

6.0

2.9

n.a.

2.4

Qingdao Port International-H 6198 HK HKD 4.46

6.5 8.3 6.1 5.7

0.5 0.5 0.5 0.4

6.0

2.9

n.a.

2.4

Simple Average 9.4 9.1 7.2 6.2 0.5 0.5 0.5 0.4 5.8 4.2 17.2 3.2

Weighted Average 9.8 9.2 7.5 6.3 0.6 0.6 0.5 0.4 5.7 5.3 16.5 3.5

China - Listed Companies

Dalian Port Pda Co Ltd-A 601880 CH CNY 2.00

50.0 n.a. n.a. n.a. 1.4 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Tianjin Port Co Ltd-A 600717 CH CNY 7.28

14.9 n.a. n.a. n.a.

0.8 0.7 0.7 0.7

4.8

1.9

n.a.

2.2

Anhui Wanjiang Logistics-A 600575 CH CNY 2.21

27.6 n.a. n.a. n.a.

1.0 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Rizhao Port Co Ltd -A 600017 CH CNY 2.84

23.7 14.2 12.3 8.6

0.8 0.8 0.7 0.7

5.5

n.a.

n.a.

3.1

Tangshan Port Group Co Ltd-A 601000 CH CNY 2.39

9.7 7.8 7.4 5.8

1.0 0.9 0.8 n.a.

10.2

3.3

n.a.

6.8

Shenzhen Chiwan Wharf Hldg-A 000022 CH CNY 17.50

22.4 n.a. n.a. n.a.

2.3 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Shenzhen Chiwan Wharf Hldg-B 200022 CH HKD 9.79

10.8 n.a. n.a. n.a.

1.1 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Xiamen Port Development Co-A 000905 CH CNY 6.18

30.9 n.a. n.a. n.a.

1.2 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Shenzhen Airport Co-A 000089 CH CNY 7.85

24.3 20.7 17.7 16.0

1.4 1.4 1.3 1.2

6.7

1.4

9.6

5.9

Jinzhou Port Co Ltd-B 900952 CH USD 0.35

33.2 n.a. n.a. n.a.

0.8 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Yingkou Port Liability Co-A 600317 CH CNY 2.69

32.5 n.a. n.a. n.a.

1.6 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Ningbo Zhoushan Port Co Lt-A 601018 CH CNY 3.80

19.0 19.0 16.9 n.a.

1.4 1.3 1.2 n.a.

6.9

1.8

n.a.

4.1

Jiangsu Lianyungang Port -A 601008 CH CNY 3.15

315.0 n.a. n.a. n.a.

1.0 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Guangzhou Port Co Ltd-A 601228 CH CNY 4.24

35.3 n.a. n.a. n.a.

2.2 n.a. n.a. n.a.

n.a.

n.a.

n.a.

n.a.

Simple Average 46.4 15.4 13.6 10.2 1.3 1.0 1.0 0.9 6.8 2.1 9.6 4.4


Other Area - Listed Companies

Piraeus Port Authority Sa PPA GA EUR 15.38

34.1 18.6 14.4 12.1 2.1 1.9 1.7 1.5

12.8

1.8

10.0

6.2

Dp World Ltd DPW DU USD 18.56

13.1 12.9 11.8 10.8

1.4 1.3 1.2 1.1

10.7

2.3

8.8

4.7

Eurokai Kgaa EUK2 GR EUR 38.00

10.4 16.0 16.8 15.6

1.4 n.a. n.a. n.a.

n.a.

n.a.

8.3

n.a.

Hamburger Hafen Und Logistik HHFA GR EUR 19.13

17.2 14.6 14.2 13.2

2.4 2.4 2.2 2.0

17.4

4.1

5.2

n.a.

Simple Average 18.7 15.5 14.3 12.9 1.8 1.9 1.7 1.6 13.6 2.7 8.1 5.4


Source: Bloomberg.

(25)

(15)

(5)

5

15

25

35

YTD Export YoY YTD Import YoY

YTD Export & Import YoY

%

(30)

(20)

(10)

0

10

20

30

40

50

Monthly Export YoY

Monthly Import YoY

Monthly Export & Import YoY

%

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Financial Statements and Ratios

[Table_IncomeStatement] Income Statement

Year end 31 Dec (US$ m) 2016A 2017A 2018F 2019F 2020F

Total Revenue 556 635 901 1,051 1,176

Terminal and related business 554 635 901 1,051 1,176

Container leasing, mgmt and

sales 2 0 0 0 0

Cost of sales (357) (425) (615) (701) (771)

Administrative expenses (85) (114) (137) (151) (165)

Other operating income 17 40 13 15 17

Other operating expenses (36) (5) (20) (20) (15)

Gain on disposal of a joint

venture and remeasurement 0 322 0 0 0

Operating Profit 95 453 142 193 242

Share of profit of associates

and JVs 200 237 258 293 335

Finance income 15 13 11 9 8

Finance costs (52) (56) (69) (62) (61)

Profit Before Tax 258 646 342 433 524

Income Tax (48) (95) (26) (42) (57)

Profit After Tax 209 551 316 391 467

Non-controlling Interest (29) (39) (17) (28) (38)

Profit from discontinued

operations 67 0 0 0 0

Shareholders' Profit / Loss 247 512 299 363 429

Basic EPS 0.083 0.169 0.096 0.117 0.138

[Table_CashFlowStatement] Cash Flow Statement


Profit before income tax 325 646 342 433 524

Depreciation and amortization 133 107 123 127 131

Other gain/loss (203) (524) (189) (231) (273)

Change in working capital 59 88 (21) (33) (5)

Interest received 16 11 18 18 18

Tax paid (29) (75) (41) (23) (38)

Cash from Operating Activities 301 253 232 292 356

Purchases of fixed assets (441) (198) (200) (210) (225)

Net cash paid for purchase of

subsidiaries 0 (302) 0 0 0

Investment in joint ventures (46) (386) (70) (60) (63)

Proceeds on disposal of a

subsidiary 1,407 0 0 0 0

Others 46 128 213 239 259

Cash from Investing Activities 966 (758) (57) (31) (29)

Change in bank loans 314 365 (149) (112) (103)

Dividends paid (422) (35) (92) (89) (107)

Consideration paid for

acquisition of a subsidiary (1,162) 0 0 0 0

Others (93) (80) (71) (64) (63)

Cash from Financing Activities (1,362) 250 (311) (265) (274)

Cash at Beg of Year 923 834 560 424 419

Net Changes in Cash (95) (255) (136) (5) 54

Cash at End of Year 834 560 424 419 473

Source: the Company, Guotai Junan International.

[Table_BalanceSheet] Balance Sheet


Property, plant and

equipment 2,368 2,980 3,057 3,142 3,247

Investment in associates 1,406 2,579 2,686 2,785 2,891

Investment in JVs 1,409 1,197 1,226 1,261 1,303

Land use rights 202 279 273 266 259

Other non-current assets 407 1,067 1,055 1,029 1,010

Total Non-current Assets 5,791 8,102 8,297 8,483 8,711

Cash & Cash Equivalents 834 560 424 419 473

Trade and other receivables 151 281 221 256 287

Inventories 10 11 30 37 41

Total Current Assets 996 852 675 712 800

Total Assets 6,786 8,954 8,972 9,195 9,511

Short-term bank borrowings 175 477 310 241 216

Trade and other payables 396 502 435 444 472

Other current liabilities 265 53 121 149 145

Total Current Liabilities 836 1,032 866 835 833

Long-term bank borrowings 1,071 1,824 1,764 1,692 1,625

Other non-current liabilities 113 253 264 289 313

Total Non-current Liabilities 1,185 2,077 2,028 1,982 1,939

Total Liabilities 2,021 3,109 2,894 2,817 2,772

Share capital 39 39 39 39 39

Retained earnings 30 51 40 49 58

Other reserves 4,286 5,098 5,325 5,588 5,902

Total Shareholders' Equity 4,355 5,189 5,404 5,676 5,999

Minority Interest 411 657 674 702 740

Total Equity 4,766 5,845 6,078 6,378 6,739

[Table_FinancialRatio] Financial Ratios

2016A 2017A 2018F 2019F 2020F

Gross margin (%) 35.8 33.0 31.7 33.3 34.5

SG&A ratio (%) 15.3 18.0 15.2 14.4 14.1

Net income margin (%) 44.4 80.7 33.2 34.5 36.4

ROA (%) 3.6 7.4 3.9 4.7 5.4

ROE (%) 4.8 10.7 5.6 6.6 7.3

Fixed asset turnover (x) 0.2 0.2 0.3 0.3 0.4

A/R turnover (x) 2.6 3.0 3.8 4.7 4.6

Inventory turnover (x) 0.8 1.0 1.5 1.1 1.0

Current ratio (x) 1.2 0.8 0.8 0.9 1.0

Quick ratio (x) 1.2 0.8 0.7 0.8 0.9

Total debt / EBITDA (x) 3.5 4.4 3.9 3.1 2.5

Net gearing ratio (%) 15.3 26.9 32.3 28.9 24.7

Interest coverage ratio (x) 16.5 14.5 10.2 12.0 14.9

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[Table_CompanyRatingDefinition] Company Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable.

Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral.

Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance 5%; or the fundamental outlook of the sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral.

Underperform 跑输大市 Relative Performance

synergy [table summary creat es new growth, maintain … · 2018. 11. 7. · mn, also in line with...

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