CICC: Maintains CHINA MER PORT (00144) Outperform Rating, Target Price of HK$16.5

CICC published a research report stating that it maintains CHINA MER PORT's (00144) net profit for 2026 unchanged and introduces a net profit of HK$7.8 billion for 2027 for the first time. The current stock price corresponds to 7.8 times the 2026 price-earnings ratio and 7.8 times the 2027 price-earnings ratio. It maintains an outperform industry rating, with a target price of HK$16.5 per share, which corresponds to 8.9 times the 2026 price-earnings ratio and 8.8 times the 2027 price-earnings ratio. There is a 13.87% potential upside from the current stock price, with the company's current stock price corresponding to a dividend yield of 6.0% for 2026/2027, making it somewhat attractive. Main points from CICC: Performance in 2025 falls below the bank's expectations The company announced its performance for 2025: revenue of HK$13.354 billion, up 12.8% year-on-year, net profit attributable to the parent of HK$6.457 billion, down 18.5% year-on-year, and attributable to the parent company's recurring profit of HK$6.511 billion, down 13.8% year-on-year. The company's performance in 2025 fell below the bank's expectations, mainly attributed to an increase of HK$605 million in expected credit loss provision net amount year-on-year. In addition, the company was affected by the dilution of equity due to the increase in shares of Shanghai International Port's affiliated company Postal Savings Bank of China. Despite these factors, there was no impact on the company's cash flow. The company's core port business in 2025 maintained strong growth, with better performance in overseas terminals The container throughput of the company's controlling port terminals increased by 8.0% year-on-year, while the overall container throughput of the company's participating port terminals increased by 3.8% year-on-year. By region, in 2025, the container volume of the company's participating terminals in the Pearl River Delta, Yangtze River Delta, Bohai Rim, and overseas terminals changed by +0.7%, +6.9%, +0.7%, and +5.7% respectively. The company's overseas controlling port terminals showed impressive growth, with a year-on-year throughput increase of 14.8%. Due to the high growth in port throughput, the company's port business operating profit increased by 20.1% year-on-year. Positive outlook on the company's profitability improvement through lean operation and long-term growth potential from overseas terminals By optimizing port operations, increasing automation, and cost control, the company continued to reduce costs. In 2025, the company achieved a gross profit margin of 48.7%, an increase of 2.3 percentage points year-on-year. The bank believes that there is still room for further improvement in the company's profit margin. In terms of overseas terminals, the company's terminals achieved rapid growth in 2025. Looking ahead, the bank believes that with the growth of the overseas port hinterland economy and the company's continued operational empowerment, the volume of overseas port business is expected to achieve long-term high growth. Risk warning: Emerging market growth may fall short of expectations, geopolitical risks may change.