[ET Net News Agency, 22 November 2017] HSBC Global Research lowered its target price
for China Merchants Port Holdings (00144) to HK$23 from HK$25 on lower earnings, but
upgraded its rating to "buy" from "hold" .
The National Development and Reform Commission (NDRC) on 15 November announced 11-21%
cuts in container handling charges for international origin and destination cargo at the
four ports of Shanghai, Ningbo, Tianjin, and Qingdao, effective from 2018.
The research house spoke with number of port operators and shipping lines. It noted that
the announcement by NDRC appeared to surprise almost everyone. While port operators think
that the actual impact of the cut will be less than the proposed discount due to the
difference in tariffs that they charge (lower) versus published tariffs.
HSBC believes that while container-related profits of such ports will be impacted, the
magnitude at the group level for CM Port and CS Ports may not be as severe as perceived by
the market. Based on the contribution of container operations to the ports' profitability
and exposure to affected ports, it estimated about 10% of 2018 earnings will be impacted
for China Merchants Port.
The research house thinks China Merchants Port now looks attractive as a much worse
scenario seems to be priced in. (KL)