UBS Group released a research report stating that it reiterated the "buy" rating for China Merchants Port (00144), based on better-than-expected performance in the first half of this year, conservative capital expenditure forecasts for fiscal years 2025 and 2026, and the attractive valuation of its shares. The target price has been raised from HK$15.4 to HK$15.6. In addition, UBS has raised its net income forecast for fiscal years 2024 to 2026 by 2% to 4%; the forecasted dividend yield for fiscal year 2024 is 7.6%, which is attractive; and the expected dividend per share is HK$0.89.
The report states that the group's recurring net profit for the first half of this year increased by 25% year-on-year, exceeding market and bank expectations. In addition, the unexpected interim dividend distributed by the company may indicate a willingness by management to increase full-year dividends. The bank cited updated management business guidance, including raising the 2024 fiscal year volume growth guidance from low single digits to mid single digits, and raising the 2025 volume growth guidance from low single digits to mid single digits to high single digits; the growth of overseas port volume may be faster than that of domestic ports in China; there is potential for an increase in freight rates in fiscal year 2025; and potential new port investments in Southeast Asia, Latin America, Africa, and the Middle East.
