\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 018 Shanghai International Port (Group) Co.Ltd(600018) )
The company has made brilliant achievements in development
Shanghai International Port (Group) Co.Ltd(600018) as the world’s largest container port, it has made brilliant achievements after years of development As the hub of the Yangtze River Delta and the hub of the world’s foreign trade, Shanghai has taken the Yangtze River Delta as the hub of its foreign trade network. From 2006 to 2021, Shanghai International Port (Group) Co.Ltd(600018) the container throughput increased by 117% to 47.03 million TEU, ranking first in the world for 12 consecutive years; Operating revenue increased by 168%, net profit attributable to parent company increased by 395%, and EPS increased by 350% Shanghai International Port (Group) Co.Ltd(600018) through the empowerment of scientific and technological innovation and the leading development of smart port, China has exported the advanced technology and management experience of “smart port” to developed countries for the first time. In 2021, Shanghai International Port (Group) Co.Ltd(600018) operating revenue was 34.3 billion yuan, an increase of 31%; The net profit attributable to the parent company was 14.7 billion yuan, an increase of 77%, in line with expectations.
The valuation of port stocks is in trouble
Compared with the company’s brilliant achievements, the share price is mediocre. Since its listing in 2006, the stock price has risen by 118%, far lower than the growth rate of EPS. The reason is the sharp decline in valuation, from PE valuation according to growth to Pb valuation according to roe. This is related to the decline in the growth of the company’s main business: Although the net profit attributable to the parent company increased by 395% in 200621, the gross profit increased by only 118%, of which the container terminal business contributing about 2 / 3 of the gross profit increased by only 101%, the annual growth rate in 201121 was only 1%, and the annual growth rate of container throughput in the same period was 4%. The profitability of container business declined: from 2007 to 21, the single container revenue of container business was stable, while the single container cost continued to rise, resulting in the decline of single container gross profit. We believe that the company’s profit growth mainly comes from investment income such as banking stocks and shipping stocks, which is difficult to overestimate.
Reinvestment ability determines valuation
Port stocks lack performance and valuation flexibility: under the dual cycle development pattern, it is difficult for container throughput and profit to grow high; The bottleneck of terminal rate regulation and capacity utilization determines that roe is difficult to rise significantly. As an asset with stable profits and abundant cash flow, the port can be valued by DCF model if it has strong reinvestment ability; If the reinvestment ability is weak, it is suitable to use DDM model for valuation. In the past, Shanghai International Port (Group) Co.Ltd(600018) made good achievements in investment in banking stocks, real estate development and shipping stocks, which proved its strong investment ability. If the future investment can maintain a high rate of return, the valuation level is expected to rise.
Maintain profit forecast and target price
Comprehensively considering the growth of container throughput, real estate settlement, investment income, etc., maintain the EPS forecast for 202223, add the EPS forecast for 2024 to 0.6 yuan, and maintain the target price unchanged.
Risk tip: the growth rate of Global trade has declined, the port fee reduction policy has been issued, the house price in Shanghai has dropped sharply, and the return on reinvestment has declined
