Shanghai Port eyes top spot after net rises 22.7pc
Shanghai International Port Group said net profit increased 22.7 per cent to 3.64 billion yuan (HK$4.05 billion) last year and announced plans to surpass Singapore as the world's largest port in two years.
The mainland's largest port operator forecast it would handle 15 per cent more containers or 30 million 20-foot equivalent units (teu) this year, up from last year's 26.15 million teu.
The port operator also aims to increase its transshipment business - in which containers are moved from one vessel to another to consolidate shipments - to 38 per cent of total throughput this year. It hopes to compete with Busan Port in South Korea for market share in international transshipments.
SIPG handled 20.4 per cent more containers last year because of export growth in the Yangtze River Delta, surpassing Hong Kong as the world's second-largest port.
However, analysts said volume was expected to grow only 10 per cent this year because of a downturn in the global economy. However, the slower growth could be partially offset by the rise in port surcharges that took effect in October last year.
The port operator increased its handling charges by 11 per cent for the Waigaoqiao terminal complex and about 20 per cent at the newly built Yangshan Port.
'The port will have steady net profit growth this year, but the valuation [of the stock] is too high,' said Guotai Junan Securities transport analyst Sun Liping.
SIPG, listed on the Shanghai Stock Exchange, traded at 40 times earnings for last year while other port operators traded at 20 to 25 times, Ms Sun said.
The port operator diversified its business last year by investing 2.9 billion yuan in food catering, property development and two port services companies, an increase of 1,143 per cent from the previous year.
However, its profit margin has deteriorated.
Its core container terminals business incurred a 2.83 per cent drop in profit margin, while the bulk terminal division saw a 20.56 per cent decrease.
The company's overall profit margin narrowed by almost 5 per cent to 47.6 per cent.
Rising salaries and depreciation costs on new terminals contributed to the decline.
Shares of China Merchants Holdings (International), which owns 26 per cent of the port operator, defied the market downturn in Hong Kong yesterday to close at HK$36.95, unchanged from the previous trading session on Friday.
Shanghai aims to eclipse Singapore as the world's largest port in two years
This year, the port operator expects to handle a container volume of, in teu: 30m