[ET Net News Agency, 22 November 2017] HSBC Global Research cut its target price for
COSCO Shipping Ports (01199) to HK$9 from HK$10 to reflect its lower ROE estimates, and
maintained its "buy" rating.
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 COSCO Shipping 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, HSBC estimated about 11% of 2018 earnings will be impacted
for COSCO Shipping Ports. (KL)