股

票

研 [Table_Title] Company Report: China Merchants Port (00144 HK) Spencer Fan 范明

究 (86755) 2397 6686 EquityResearch 公司报告： 招商局港口 (00144 HK) [email protected]

10 May 2019 A[Table_S Relativelyummary ]Cautious View for 2019, Reiterate "Accumulate" 对2019年维持相对谨慎，重申“收集”

 The Company's management guided low single-digit growth in 2019. On [Table_Rank] the other hand, the management predicts that the Company's main driving Rating: Accumulate Maintained force in 2019 will come from the overseas segment, and it expects overseas 公 container volume to record medium-to-high single-digit YoY growth in 2019. 评级： 收集 (维持) 司 Domestic port container loading and unloading operation fee might not be 报 greatly adjusted in 2019, while handling fees of some overseas ports might increase. Overall, we expect CMP's port business to generate low single-digit [Table_Price] 告 6-18m TP 目标价: HK$16.80 YoY revenue growth in 2019. Revised from 原目标价: HK$17.00

CompanyReport  Qianhai land ready to release value; the disposal of land interests is Share price 股价: HK$15.120 expected to bring about HK$3.58 billion in after-tax income. We believe that China Merchants Port will benefit indirectly from the long-term development of Shenzhen’s Qianhai Shekou Free Trade Zone. It is Stock performance understood that Qianhai Land will still be developed in accordance with the 股价表现 mature development model of the "Port-Zone-City" of China Merchants [Table_QuotePic] Group. % of return 10.0  Reiterate "Accumulate" rating and adjust TP to HK$16.80. CMP’s port 5.0 resources are still balanced, and we still favor CMP's overseas development 0.0

capability. As the leader in the Chinese port industry, CMP’s current valuation (5.0)

证 remains attractive. Our TP represents 6.9x, 8.3x and 7.3x 2019-2021 PER. (10.0)

券 告 (15.0) 管理层指引 年公司吞吐量有望录得低单位数增长。另一方面，管理层预测公司  2019 2019 (20.0)

研 报 年的主要驱动力将来自海外，并预测海外箱量有望录得中高单位数增速。2019 年国内港口 (25.0)

集装箱装卸作业费不会有较大调整，而部分海外港口装卸费则可能上涨。总体来看，我们 (30.0)

究 究

预计 2019 年公司港口装卸业务收入将会呈现低单位数的同比增长。 May/18 Aug/18 Nov/18 Jan/19 May/19

报  研 前海土地开始释放价值：土地利益的处置有望带来 35.8 亿港元税后收益。我们认为招商 HSI CHINA MERCHANTS PORT HDLGS

告 局港口将间接并长期受益于深圳前海蛇口自贸区的开发。据了解，前海土地依然将按照招 券

商局集团的“前港-中区-后城”成熟发展模式开发。 EquityResearch Report Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y  证 重申“收集”评级并调整目标价至 16.80 港元。公司国内港口配置资源仍然均衡，我们依旧 股价变动 1 个月 3 个月 1 年 看好招商局港口在海外的拓展能力。作为国内港口行业龙头，公司目前估值水平仍吸引。 [Tab Abs. % (8.1) (5.5) (13.5)

我们的目标价对应 6.9 倍、8.3 倍及 7.3 倍的 2019-2021 年市盈率。 绝对变动 %

le_I Rel. % to HS Index (2.9) (7.7) (6.2) 相对恒指变动 % nfo1 Avg. Share price(HK$)

15.9 16.4 15.7 港 平均股价（港元） ] Source: Bloomberg, Guotai Junan International. 口 行 业

PortsSector

Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结Profit] 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 (HK$ m) (HK$ m) (HK$) (△ %) (x) (HK$) (x) (HK$) (%) (%)

2017A 8,692 6,028 1.839 4.7 8.2 22.409 0.7 2.109 14.0 8.7 [Tab 2018A 10,160 7,245 2.196 19.4 6.9 22.826 0.7 0.958 6.3 9.7 le_I 2019F 10,231 8,016 2.429 10.6 6.2 24.496 0.6 0.972 6.4 10.3 nfo2 2020F 11,037 6,681 2.024 (16.7) 7.5 25.727 0.6 0.607 4.0 8.0 2021F 11,782 7,586 2.299 13.6 6.6 27.549 0.5 0.689 4.6 8.6 中] 招 Shares in issue (m) 总股数 (m) 3,299,845,627.0 Major shareholder 大股东 China Merchants Group 61.7% 外 [Table_BaseData] 商 Market cap. (HK$ m) 市值 (HK$ m) 49,893,665,880.2 Free float (%) 自由流通比率 (%) 38.3 运 局 3 month average vol. 3 个月平均成交股数 (‘000) 3,475.6 FY19 Net gearing (%) FY19 净负债/股东资金 (%) 35.2 港输 52 Weeks high/low (HK$) 52 周高/低 (HK$) 19.160 / 13.080 FY19 Est. NAV (HK$) FY19 每股估值（港元） 28.0 口 Source: the Company, Guotai Junan International.

China Merchants Port (00144 HK) ChinaPort (00144 Merchants See the last page for disclaimer Page 1 of 8

[Table_PageHeader]China Merchants Port (00144 HK)

With in-line annual results, China Merchants Port’s ("CMP" or "the Company") operations in 2019 might face more

obstacles from external forces; we believe in the Company’s operations capability. ] CMP1 r ’s 201a M 8 revenuet h g i increasedR _ e l 16.9%b a T [

YoY to HK$10.16 bn, in line with our estimation. Shareholders’ profit rose 20.2% YoY to HK$7.245 bn, slightly higher than our

expectation. Excluding proceeds from sale of the former Shenzhen Chiwan Wharf Holdings ("SCW") amounting HK$3.733 bn,

2018 recurring profit fell 21.8% YoY to HK$4,294 mn. In which, net profit of port business slightly fell 4.9% YoY to HK$5.716 bn, mainly due to profit decline of Shanghai International Port Group ("SIPG", 600018 SH) and higher-than-expected costs. Financial

expenses rose 36% YoY, mainly due to new issuance of notes for the newly acquired Paranagua port projects; management 10 May2019 expenses increased 50% YoY, mainly due to restructuring and acquisition-related activity costs. CMP’s overall container throughput increased 6.0% YoY to 109.06 mn TEUs, mainly due to overseas port growth (up 12.9% YoY). Mainland ports contributed YoY growth of 4.7%, missing our expectations. The management expects CMP’s container throughput growth to stay flat or yield low single-digit YoY growth in 2019. The main driving force is the projected YoY growth of medium-to-high single-digit percentage growth in overseas regions. The management expects domestic container handling charge fees to stay flat, while they expect overseas port loading and unloading fees to increase in 2019.

Pearl River Delta For 1Q19, CMP’s throughput in the Pearl River Delta declined 8.0% YoY to 4.135 mn TEUs, missing our expectation, mainly due to sluggish export figures in the region. Exports of goods via the Pearl River Delta are mainly low value-added light industrial

products. These exports have been affected by rising labor/ rental costs as well as the Sino-U] .S2 . r tradea M wart h ing 1Q19i R ._ Fore l 2018,b a T [

terminals in West Shenzhen handled container throughput of 10.69 mn TEUs, down by 4.4% YoY, of which international container throughput occupied 94.1% of the total (10.06 mn TEUs, down 2.4% YoY, mainly due to disposal of CMP’s entire equity interest in SCW, currently known as China Merchants Port Group (001872 SZ, CMP’s parent company). Affected by decrease in business volume due to infrastructure upgrade and transformation, Haixing Ports’ bulk cargo volume handled in the West Shenzhen Port

Zone amounted 13.62 mn tonnes, down 37.5% YoY. The overall container throughput handled by ports in Hong Kong decreased by 5.7% YoY, of which container throughput handled by ports in Kwai Tsing area decreased by 4.7% YoY. Modern Terminals Limited and China Merchants Container Services Limited delivered an aggregate container throughput of 5.93 mn TEUs, up by

2.5% YoY, which outperformed the overall market of Hong Kong. We expect CMP’s overall Pearl River Delta throughput growth to (00144 HK) stay flat in 2019.

Yangtze River Delta 招商局港口 Shanghai International Port ("SIPG", 600018 SH) handled container throughput of 10.4 mn/ 42.01 mn TEUs in 1Q19/ 2018, up YoY by 6.9%/ 4.4%, in line with our expectation. SIPC’s steady improvements were mainly driven by the increase in the number of shipping routes due to the re-organization of shipping alliances, and the release of handling capacity since the commencement of operation of Yangshan Phase IV, SIPG’s fully automated terminal. Bulk cargo volume handled decreased 8.3% YoY to 150 mn tonnes due to decrease in amount of coal handled upon the adjustments on the structure of bulk cargo sources made by SIPG.

Ningbo Daxie terminal handled container throughput of 0.813 mn/ 3.16 mn TEUs for 1Q19/ 2018, representing changes YoY of China Merchants Port -4.1%/ 5.1%, mainly due to 1Q18 high base as well as adjustment of relevant shipping routes.

Overseas In 1Q19/ 2018, total container throughput handled by CMP’s overseas operations rose YoY by 5.9%/ 12.9% to 5.115 mn/ 20.66 mn TEUs, among which throughput handled by CICT in Sri Lanka rose by 4.5%/ 12.0% YoY to 0.668 mn/ 2.68 mn TEUs, respectively. Container throughput handled by LCT in Togo increased YoY by 10.7%/ 18.3% to 0.263 mn/ 1.05 mn TEUs. Throughput handled in Nigeria was 0.113 mn/ 0.48 mn TEUs, representing YoY change of -14.3%/ 2.4%. Container throughput handled by Port de Djibouti S.A. in Djibouti amounted to 0.231 mn/ 0.86 mn TEUs for 1Q19/ 2018, changing YoY by 23.8%/ -7.5%, mainly attributable by decrease in trans-shipment volumes to Ethiopia during 1Q19. Container throughput handled by Kumport in Turkey declined by 6.0% YoY to 0.293 mn TEUs in 1Q19. TCP Participações S.A. ("TCP") in Brazil recoded YoY increase of 192.9% YoY, or 0.205 mn TEUs, due to high base effect, while the management expects TCP to generate profit in 2019, signaling throughput ramp-up under CMP’s enhancing operations.

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See the last page for disclaimer Page 2 of 8 [Table_PageHeader]China Merchants Port (00144 HK)

Figure-1: Western Shenzhen Throughput and YoY Figure-2: Greater China’s Key Port Throughput and YoY

Change Change ] 1 r a M t h g i R _ e l b a T [

000' Shenzhen West Throughput SIPG HK % 000' Ningbo-Daxie SIPG YoY % TEU

Shenzhen West Throughput YoY TEU HK YoY Ningbo-Daxie YoY

1,200 10 5,000 25 1,002 1,031 20 922 944 932 5 1,000 4,000 15 803 813 833 813 827 800 835 0 800 10 656 (5) 3,000 10 May2019 5 600 (10) 0 2,000 400 (15) (5) (20) (10) 200 1,000 (25) (15) 0 (30) 0 (20)

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

Figure-4: Company-wide Monthly Throughput and YoY Figure-3: CMP’s Overseas Throughput and YoY Change Change 000' Sri Lanka - CICT Nigeria 000' CMP's Monthly Throughput YoY % ] 2 r a M t h g i R _ e l b a T [

% TEU Terminal Link-Turkey CICT YoY TEU Nigeria YoY Terminal Link-Turkey YoY 12,000 10 1,400 100 9,766 9,359 9,397 9,361 9,519 9,530 10,000 9,232 9,018 9,244 8 1,200 80 8,681 8,843 8,896 60 7,501 6 1,000 8,000 40 4 800 6,000 20 2 600 4,000 0 0 400 (20) 2,000 (2)

200 (40) (00144 HK)

0 (4) 0 (60)

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International. 招商局港口 Qianhai land’s partial revaluation is likely to confirm a one-off gain around mid-2019. CMP’s shared land accounted for 966,000 square meters in Qianhai. Accordingly, CMP will swap 55% of the land (about 550,000 square meters) to Shenzhen Dachan Bay Port Area. The remaining 45% (425,300 square meters) will be contributed to CMG, together with Qianhai Authority’s commercial land project. CMP and other related parties (other subsidiaries of CMG, China Merchants Shekou,

001979 SZ) will consolidate the land in to a single entity ("A2 Company"). After land revaluations, current estimated value of the China Merchants Port A2 company is around RMB43.21 bn. According to overall planning of the Qianhai Free Trade Zone, the Shenzhen Qianhai Authority will also contribute a planned land of 510,400 square meters to the entire Qianhai-CMG land package, while CMG (including subsidiary CMP) will additionally contribute capital of approximately RMB15 bn to realize the schedules holding ratio of 50%/ 50% (CMG/ Qianhai Authority) for this prospectively commercial land project. According to the shareholding structure, CMP holds approximately 14.0% of A2's equity, and is expected to contribute capital of approximately RMB2.1 bn. According to company announcements, CMP is expected to record approximately RMB3.2 bn (HK$3.58 bn), and we expect the Company to recognize this one-off gain around the interim results period. It is understood that the main business of the joint venture company includes the development and operation management of the "Free Trade New City", as well as the comprehensive operations services of the park and the service guarantee of Shenzhen-Hong Kong cooperation. It will also participate in the investment and services of the Free Trade Zone and other key countries and regions along the Belt and Road along the pre-port, central and post-city model.

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See the last page for disclaimer Page 3 of 8 [Table_PageHeader]China Merchants Port (00144 HK)

Table-1: Qianhai Land Progress Related Calculations

] 1 r a M t h g i R _ e l b a T [

Categories RMB hundred mn New value of CMG's Qianhai land (excluding Exchange Dachan Bay land) 925.3

Original value of CMG's Qianhai land (excluding Exchange Dachan Bay land) 130 Tax discount factor (95%) 95% CMG‘s share of the incremental value (CMG/Qianhai Authority=40%/60%) 40%

Amount of rental compensation 0.1491 10 May2019 Agreed portion of land appreciation value to be enjoyed by CMG's Land 302.1 Holding Company, A2 Aggregate land value of CMG's Qianhai land (Appreciation+Original value) 432.1 Source: the Company, Qianhai Authority of the Shenzhen Municipal Government, Guotai Junan International.

We adjust our earnings estimates for 2019-2021 amid prudent throughput estimations for 2019. During Jan. to Apr. 2019, China’s exports/ imports changed 0.2%/ -2.5% YoY (in US$). Monthly exports/ imports in April 2019 fluctuated YoY by -2.7%/ +4.0%, due to the baseline effect from 2018 as well as weak demand in 1Q19. Today, the U.S raised the 10% tariff on US$200 bn (second batch of the targeted Chinese export) in Chinese export goods to 25%, which might largely hurt comparative advantage of Chinese export goods. Considering policy headwinds and sluggish export data, we now tune down CMP’s 2019 throughput projections, which will directly affect CMP’s core profit. On the other hand, as CMP is likely to recognize the HK$3.58 bn

] 2 r a M t h g i R _ e l b a T [

revaluation gain from its partial Qianhai land disposal, this one-off gain recognition will boost the Company’s 2019 earnings estimate. As a result, we adjust CMP’s 2019-2020 shareholders’ profit estimates by -0.2% and -8.9%, respectively. Correspondingly, 2019-2021 EPS estimates are HK$2.429, HK$2.024 and HK$2.299, representing YoY change of 10.6%, -16.7% and 13.5%, respectively. Our projected CMP earnings per share fluctuated largely in 2018/ 2019, mainly due to the revenue

adjustments after the equity swap with former SCW (000022 SZ, delisted, now listed as China Merchants Port Group Co., Ltd,

001872 SZ, CMP’s direct parent company), as well as Qianhai land revaluations, and potential throughput growth slowdown due to the escalated Sino-U.S. trade dispute.

(00144 HK) Table-2: Change in CMP’s Earnings Estimates HK$ mn 2019F 2020F 2021F

New Estimates 招商局港口 Revenue 10,231 11,037 11,782 Shareholders' profit 8,016 6,681 7,586 EPS (HK$) 2.429 2.024 2.299 ROE (%) 10.3 8.0 8.6 Old Estimates Revenue 10,231 10,803 n.a.

Shareholders' profit 8,032 7,336 n.a. China Merchants Port

EPS (HK$) 2.412 2.203 n.a. ROE (%) 9.8 8.4 n.a. Changes of Estimates Revenue (%) 0.0% 2.2% n.a. Shareholders' profit (%) -0.2% -8.9% n.a. EPS (%) 0.7% -8.1% n.a. ROE (ppt) 0.5 (0.3) n.a. Source: Guotai Junan International.

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See the last page for disclaimer Page 4 of 8 [Table_PageHeader]China Merchants Port (00144 HK)

Figure-5: YTD Trade Growth in China (US$) Figure-6: Monthly Trade Growth in China (US$)

YTD Export YoY YTD Import YoY % Monthly] 1 r Exporta M YoYt h g i R _ e l b a T [ % Monthly Import YoY YTD Export & Import YoY 50 Monthly Export & Import YoY 35 40 25 30

15 20

5 10 10 May2019

(5) 0

(15) (10)

(25) (20)

(30) Source: General Administration of Customs, Guotai Junan International. Source: General Administration of Customs, Guotai Junan International.

Maintain “Accumulate” rating and slightly revise down TP to HK$16.80 to reflect CMP’s fair valuation. With horizontal competition solved for West Shenzhen port zone, we favor CMP’s execution capability in exploring qualified overseas opportunities. Yet, the sluggish export outlook especially in the Pearl River Delta region might drag down CMP’s overall throughput. In terms of industry outlook, overall domestic port throughput growth might endure some slowdown due to external

] 2 r a M t h g i R _ e l b a T [ uncertainties. 80.5% of CMP’s throughput still came from non-overseas terminals in 1Q19, while we expect CMP’s profitability to be partially influenced by China’s future export slowdown. We still believe that CMP’s port layout will be a balanced yet strong one, while newly added terminals may create more cargo for CMP. Our TP represents 6.9x, 8.3x and 7.3x 2019-2021 PER, and a 0.7x 2019 PBR.

Major risks: 1) weak marine trade in 2Q19 and beyond, and 2) upstream price bargaining pressure from new container shipping alliances.

(00144 HK)

Figure-7: CMP’s FY19-FY21 Revenue Estimates Figure-8: CMP’s FY19-FY21 Net Profit Estimates

HK$ mn Revenue YoYs % HK$ mn Shareholdrs' Profit YoY % 14,000 20% 9,000 20% 25% 17% 8,016 10,231 招商局港口 12,000 11,782 8,000 7,586 20% 11,037 6,681 15% 7,000 7,245 15% 10,000 6,028 8,692 10,160 6,000 10% 14% 8,000 10% 9% 10% 5,000 11% 5% 6,000 4,000 0% 4,000 3,000 -5% 8% 7% 5% 1% 2,000 -10% China Merchants Port 2,000 1,000 -15% -17% 0 0% 0 -20% FY17A FY18F FY19F FY20F FY21F FY17A FY18F FY19F FY20F FY21F Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

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See the last page for disclaimer Page 5 of 8 [Table_PageHeader]China Merchants Port (00144 HK)

Table-3: Peers Comparison PE PB ROE(%) D/Y(%) EV/EBITDA ROA(%)

] 1 r a M t h g i R _ e l b a T [ Company Stock Code Currency Last price 16A 17F 18F 19F 16A 17F 18F 19F 17F 17F 17F 17F HK - Listed Companies

China Merchants Port Holding 144 HK HKD 15.12 6.9 6.2 7.5 6.6 0.7 0.6 0.6 0.5 10.3 6.4 14.8 5.4

Cosco Shipping Ports Ltd 1199 HK HKD 7.28 8.8 9.1 7.7 6.0 0.6 0.5 0.5 0.4 5.6 4.3 16.0 3.9

Dalian Port (Pda) Co Ltd-H 2880 HK HKD 0.99 20.9 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 0.85 12.1 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 1.12 10.5 9.0 9.0 n.a. 0.5 0.5 0.5 n.a. 5.4 3.1 n.a. 2.2

Qingdao Port International-H 6198 HK HKD 5.49 6.5 8.3 6.1 5.7 0.5 0.5 0.5 0.4 6.0 2.9 9.7 2.4

10 May2019 Simple Average 11.0 8.1 7.6 6.1 0.5 0.5 0.5 0.4 6.8 4.2 13.5 3.5 Weighted Average 9.3 7.7 7.0 6.1 0.6 0.6 0.5 0.4 7.6 4.5 12.8 3.8

China - Listed Companies

Dalian Port Pda Co Ltd-A 601880 CH CNY 2.11 52.8 n.a. n.a. n.a. 1.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tianjin Port Co Ltd-A 600717 CH CNY 7.78 21.6 n.a. n.a. n.a. 0.8 0.8 0.8 n.a. 3.9 1.4 n.a. 1.8

Anhui Wanjiang Logistics-A 600575 CH CNY 3.00 27.3 n.a. n.a. n.a. 1.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Rizhao Port Co Ltd -A 600017 CH CNY 3.16 15.0 15.0 12.2 6.6 0.9 0.8 0.7 n.a. 6.7 n.a. n.a. 4.0

Tangshan Port Group Co Ltd-A 601000 CH CNY 2.92 10.8 10.4 9.7 n.a. 1.1 1.0 0.9 n.a. 10.3 2.4 n.a. 7.1

China Merchants Port Group-A 001872 CH CNY 16.43 26.9 n.a. n.a. n.a. 1.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

China Merchants Port Group-B 201872 CH HKD 9.54 13.2 n.a. n.a. n.a. 0.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Xiamen Port Development Co-A 000905 CH CNY 7.73 162.7 n.a. n.a. n.a. 1.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Shenzhen Airport Co-A 000089 CH CNY 9.21 28.3 23.3 20.3 22.7 1.6 1.6 1.5 1.4 6.8 1.1 12.2 5.5

Jinzhou Port Co Ltd-B 900952 CH USD 0.37 20.4 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 2.67 17.3 n.a. n.a. n.a. 1.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

] 2 r a M t h g i R _ e l b a T [ Ningbo Zhoushan Port Co Lt-A 601018 CH CNY 4.57 20.8 21.3 19.9 15.8 1.6 1.5 1.4 n.a. 7.6 1.8 n.a. 4.4

Jiangsu Lianyungang Port -A 601008 CH CNY 4.88 n.a. n.a. n.a. n.a. 1.6 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Guangzhou Port Co Ltd-A 601228 CH CNY 4.30 35.8 n.a. n.a. n.a. 2.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Simple Average 148.5 17.5 15.5 15.0 1.3 1.1 1.1 1.4 7.0 1.7 12.2 4.6 Weighted Average 56.3 19.3 17.6 16.2 1.3 1.3 1.2 1.4 7.3 1.7 12.2 4.6

Other Area - Listed Companies

Piraeus Port Authority Sa PPA GA EUR 20.30 18.2 16.8 15.3 14.0 2.4 2.4 2.2 2.0 13.9 2.1 8.7 7.5

Dp World Ltd DPW DU USD 17.80 11.4 11.8 11.3 10.6 1.3 1.2 1.1 1.1 11.1 2.6 7.8 4.7

Eurokai Kgaa EUK2 GR EUR 40.00 15.0 11.5 14.4 13.4 n.a. 1.3 1.3 1.2 14.0 n.a. 6.8 10.3

Hamburger Hafen Und Logistik HHFA GR EUR 21.92 14.2 15.0 14.3 13.4 2.6 2.5 2.3 2.2 17.5 3.8 6.4 5.1

Simple Average 14.7 13.8 13.8 12.8 2.1 1.9 1.7 1.6 14.1 2.8 7.4 6.9 (00144 HK) Weighted Average 12.0 12.3 11.8 11.1 1.5 1.4 1.3 1.2 11.9 2.7 7.6 5.0 Source: Bloomberg.

招商局港口 China Merchants Port

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See the last page for disclaimer Page 6 of 8 [Table_PageHeader]China Merchants Port (00144 HK)

Financial Statements and Ratios [Table_IncomeStatement] Income Statement [Table_BalanceSheet] Balance Sheet

] 1 r a M t h g i R _ e l b a T [

Year end 31 Dec (HK$ m) 2017A 2018A 2019F 2020F 2021F Year end 31 Dec (HK$ m) 2017A 2018A 2019F 2020F 2021F

Total Revenue 8,692 10,160 10,231 11,037 11,782 Property, plant and

-Ports operations 8,185 9,544 9,573 10,295 10,945 equipment 30,880 29,212 29,500 29,202 28,862 -Logistics 410 459 477 535 599 Intangible assets 9,553 19,054 19,053 19,052 19,051 -Other operations 97 157 181 208 239 Investment properties & Land 21,262 19,305 19,734 20,222 20,772 Investment in associates &

Cost of services and expenses (6,421) (7,537) (7,650) (8,162) (6,960) JVs 53,064 57,780 61,249 65,031 68,972 10 May2019 Other gains 785 3,337 4,967 1,060 340 Other non-current assets 4,140 3,787 4,099 3,767 3,922 Other income 85 54 177 183 189 Total Non-current Assets 118,899 129,138 133,636 137,273 141,579 Operating Profit 3,141 6,014 7,724 4,118 5,351 Finance cost - net (1,168) (1,590) (1,630) (1,486) (1,416) Cash & Cash Equivalents 9,247 5,238 11,176 14,255 15,783 Share of profit of JV and Debtors, deposits and 5,472 4,826 5,172 5,452 5,749 associates prepayments 3,705 3,377 5,345 4,065 5,980 Profit Before Tax 7,445 9,250 11,265 8,084 9,684 Other current assets 100 2,184 117 132 132 Total Current Assets 13,052 10,799 16,637 18,452 21,895 Income Tax (744) (1,295) (1,784) (770) (1,152) Total Assets 131,951 139,937 150,273 155,725 163,475 Profit After Tax 6,701 7,955 9,482 7,313 8,532 Non-controlling Interest (673) (710) (1,465) (633) (946) Creditors and accruals 8,999 3,684 6,468 5,076 5,772 Shareholders' Profit / Loss 6,028 7,245 8,016 6,681 7,586 Borrowings 6,268 5,234 6,513 7,981 7,981 Basic EPS 1.839 2.196 2.429 2.024 2.299 Other financial liabilities 262 233 321 139 207 Total Current Liabilities 15,529 9,151 13,302 13,196 13,960

] 2 r a M t h g i R _ e l b a T [

[Table_CashFlowStatement] Cash Flow Statement Long-term borrowings 22,233 33,622 33,356 33,356 33,356 Loans from related parties 59 0 65 65 65

Deferred tax liabilities 2,638 3,354 2,797 2,889 2,950 Year end 31 Dec (HK$ m) 2017A 2018A 2019F 2020F 2021F Other non-current liabilities 1,851 5,806 5,771 5,736 5,701 Operating profit 3,141 6,014 7,724 4,118 5,351 Total Non-current Liabilities 26,781 42,782 41,989 42,046 42,072 Depreciation and amortization 1,557 1,970 1,643 1,697 1,733 Total Liabilities 42,310 51,933 55,291 55,242 56,033 Others 173 879 1,155 (196) 126

Change in working capital 312 84 462 146 (1,566) Share capital 38,207 39,070 39,070 39,070 39,070 Income tax paid (536) (567) (2,251) (863) (1,024) Reserves and proposed Dividend received from dividend 35,240 36,251 41,764 46,632 52,645 associates & JCEs 1,923 2,242 2,403 2,533 2,671 Total Shareholders' Equity 73,447 75,321 80,834 85,702 91,715 Gain on disposal of a (00144 HK) Minority Interest 16,194 12,683 14,148 14,781 15,727 subsidiary (813) (4,400) 0 0 0 Total Equity 89,641 88,004 94,982 100,483 107,442 Cash from Operating Activities 5,757 6,222 11,135 7,435 7,291

CapEx (1,752) (2,564) (543) (543) (543) 招商局港口 Proceeds from disposals of

other financial assets 8,739 4,159 0 0 0

Acquisition of Interests in

Associates/jointly Controlled

Entities (2,545) (4,221) (700) (863) (863) [Table_FinancialRatio] Acquisitions of assets through Financial Ratios acquisitions of subsidiaries (1,144) (10) (1,150) (622) (622) 2017A 2018A 2019F 2020F 2021F Acquisition of subsidiaries, net Profitability of cash acquired (2,119) (5,366) 0 0 0 ROC (%) 5.0 5.9 6.8 4.8 5.4 China Merchants Port Others (654) (7,352) 275 381 451 ROA (%) 5.1 5.3 5.5 4.4 4.8 Cash from Investing Activities 525 (15,354) (2,118) (1,647) (1,577) ROE (%) 8.7 9.7 10.3 8.0 8.6

Change in loans 4,066 9,806 3,147 1,468 0 Liquidity Interest paid (1,192) (1,685) (1,630) (1,486) (1,416) Current ratio (x) 0.8 1.2 1.3 1.4 1.6 Others (529) (970) (2,097) (906) (1,354) Quick ratio (x) 0.7 1.0 0.9 1.3 1.2 Dividends paid (3,247) (1,802) (2,431) (1,640) (1,229) Cash from ops. / Avg curr. liability 46.7 50.4 99.2 56.1 53.7 Cash from Financing Activities (902) 5,349 (3,011) (2,564) (4,000) Solvency Cash at Beg of Year 3,637 9,247 5,238 11,176 14,255 Total debt / equity (%) 31.9 44.2 42.0 41.2 38.5 Net Changes in Cash 5,380 (3,783) 6,006 3,224 1,713 Net gearing ratio (%) 26.3 42.1 35.2 31.3 27.6 Cash at End of Year 9,247 5,238 11,176 14,255 15,783 Interest coverage ratio (x) 7.4 6.8 7.9 6.4 7.8

Source: the Company, Guotai Junan International.

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Company

See the last page for disclaimer Page 7 of 8 [Table_PageHeader]China Merchants Port (00144 HK)

Company[Table_CompanyRatingDefinition] Rating Definition

The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [

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. 10 May2019 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 <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [ 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<-5%; Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ] (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report.

(3) Except for KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),BANK OF GANSU (02139 HK),BINHAI INVESTMENT (02886 (00144 HK)

HK),VALUE A SHARE (03095 HK),CAM SCSMALLCAP (03157 HK),HAITIANTIAN (08227 HK),CSOP MSCI-R (CNY) (83149 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report. (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. 招商局港口 (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

China Merchants Port DISCLAIMER

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in

any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject

Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

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© 2019 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel.: (852) 2509-9118 Fax: (852) 2509-7793

Website: www.gtja.com.hk

Company

See the last page for disclaimer Page 8 of 8