Caused by the turmoil in the Red Sea, China Merchants Port (00144.HK) has seen a significant increase in container volume at the CICT terminal in Sri Lanka and the PDSA project in Djibouti. "The designed throughput of the Colombo CICT terminal for the year is 2.4 million TEU. It has already reached 2 million TEU from January to July this year, with a target of 3 million standard containers for the whole year," said Lu Yongxin, Executive Director and General Manager of China Merchants Port, at today's performance briefing.

Lu Yongxin further explained that, due to the turmoil in the Red Sea, the container fleet has been disrupted, leading to serious congestion at the port and a significant increase in transshipment volume at the Colombo Port in Sri Lanka (including the company's CICT terminal).

Today, China Merchants Port announced its mid-term performance for 2024. During the reporting period, the company achieved a revenue of 5.795 billion Hong Kong dollars, a year-on-year decrease of 0.17%. The profit attributable to the owners of the company's equity was 4.452 billion Hong Kong dollars, an increase of 32.9% compared to the same period last year. The recurring profit attributable to the owners of the company's equity was 4.154 billion Hong Kong dollars, an increase of 24.9% compared to the same period last year, with the port business profit reaching 4.791 billion Hong Kong dollars, an increase of 23.1% year-on-year.

Looking at the different business segments, the company completed a container throughput of 71.77 million TEU in the first half of the year, a year-on-year increase of 7.9%; completed bulk cargo throughput of 0.274 billion tons, a year-on-year increase of 1.7%. Among them, the overseas container and bulk cargo business of the company grew rapidly, with the Colombo CICT terminal completing a container throughput of 1.73 million TEU, an increase of 8.5% year-on-year, and the Djibouti PDSA completing a container throughput of 0.65 million TEU, an increase of 77% year-on-year. The growth in Djibouti's container volume is mainly due to the increase in international transshipment business and the recovery of import demand in the economic hinterland.

Regarding the future trends of shipping freight rates and the impact on the port industry, Lu Yongxin said that in the past two months, the impact caused by the turmoil in the Red Sea has stabilized, and the transpacific shipping rates have dropped. The company is not bullish on future freight rates.

"We can see that from the port of Singapore to our mother port in Shenzhen, the disorder in ship schedule and the phenomenon of ships getting stuck at the port have not fundamentally changed. But if the Red Sea crisis does not further escalate and more shipping capacity is put into operation, it is expected that the shipping market will still be oversupplied in the second half of this year to next year," said Lu Yongxin.

In terms of capital expenditure, Tu Xiaoping, Executive Director and Chief Financial Officer of the company, said that capital expenditure is expected to be around 1.5 billion yuan in the second half of this year, mainly for the expansion of yards, further expansion of the company's capacity, and investment in some container businesses.

It is worth noting that China Mer Port has also recently announced the design agreement for the Phase II project of Da Chan Bay. In this regard, Lu Yongxin revealed that the total land area of the Phase II project of Da Chan Bay is 0.525 million square meters, with a design workload of 2 million standard containers. At present, the total budget for the entire project is approximately 6 billion yuan. 'Currently, the company is also advancing the smart optimization planning of the terminal, and believes that the total investment cost may further decrease.'