CICC: Keeping China Merchants Port (00144) outperforming the industry rating and raising the target price to HK$18
The Zhitong Finance App learned that CICC released a research report saying that considering that single-box revenue exceeded expectations, China Merchants Port (00144) raised its 2026 revenue by 3.42% to HK$14.25 billion, but due to losses accrued by participating companies outside the port's main business in the first half of the year, the bank kept its net profit basically unchanged in 2026. Considering that the volume and single box revenue are expected to increase further next year, the net profit in 2027 was raised by 7.37% to HK$8.42 billion. The current stock price corresponds to 8.8 times the 2026 price-earnings ratio and 8.2 times the 2027 price-earnings ratio. Maintaining an outperforming industry rating, the bank raised its target price by 9.09% to HK$18 per share, corresponding 9.7 times the 2026 price-earnings ratio and 9 times the 2027 price-earnings ratio, with 9.69% upside compared to the current stock price.
CICC's main views are as follows:
The profit of the main business of 1H26 port was better than the forecast
The company announced 1H26 results: achieved revenue of HK$7.297 billion, +13.0% year on year; net profit to mother of HK$3,832 million, corresponding to profit of HK$0.913 per share, +6.9% year-on-year. The profit of the main port business was better than the bank's previous expectations, mainly because the company achieved single-box revenue better than the bank's previous expectations. The company's cash flow is abundant and growing healthily. The cash flow from 1H26's operating activities increased 15% at the same time as operating profit. In terms of dividends, the mid-term dividend remained unchanged at HK$0.25 per share.
1H26's port sector revenue and profit increased by 13.2%/17.7%, respectively. The bank believes that it mainly benefited from the simultaneous increase in the number of containers and single box revenue of the company's holding terminals. In the first half of the year, the container throughput of the company's participating terminals was +4.5%, of which container throughput at the holding terminal was +3.5%. Looking at the subregion, 1H26's container volume in the Pearl River Delta, Yangtze River Delta, Bohai Rim and overseas terminals changed by +1.5%/+6.4%/+7.0%/+2.5% year-on-year, respectively. Furthermore, the company's port sector revenue growth rate is higher than the holding terminal's container volume growth rate (+13.2% vs. +3.5%). The bank believes that the terminal's single-box revenue increased year-on-year mainly due to the company's increased terminal rate and optimization of the container volume structure.
Development trends
Looking back, the bank believes that the company's volume of goods is expected to maintain good growth, and is optimistic that the company will further improve profitability through lean operations. The bank believes that benefiting from factors such as increased volume of AI-related products, accelerated exports of high-end Chinese manufacturing, and economic growth in emerging markets, the company's terminal cargo volume is expected to continue to grow. On the price side, the bank believes that the company's overseas terminal charges are expected to continue to increase, and single box revenue is expected to continue to grow due to the optimization of the container volume structure. Furthermore, the bank is optimistic that the company will continue to reduce costs and expenses by optimizing port operation processes, increasing automation ratios and cost control, etc., to drive increased profitability.
Risk warning: Geopolitical changes, global economic growth is declining.