About a year ago Merrill Lynch raised its recommendation on China Merchants Holdings (CM) from 'neutral' to 'buy' after its acquisition of a 30 per cent stake in Shanghai International Port Group (SIPG) for six billion yuan.
The deal would give CM, whose port operations were mainly in Shenzhen and Hong Kong, a foothold in the Yangtze River Delta with Shanghai's Yangshan port project. SIPG held 75 per cent of Shanghai Port Container, which was developing Yangshan's first five berths and had an interest in the Waigaoqiao port project.
Earnings estimates for 2005 had been increased by 8 per cent and for 2006 by 10 per cent. Estimates of net asset value had been increased from $13 to $17 per share. Merrill Lynch set a 12-month price target of $17 on the counter, up from $14.10 at the time of the report.
In May last year CM said consolidated net profit for the 12 months to December 2005 jumped 40 per cent to $2.06 billion.
In September CM said interim earnings increase 39.57 per cent to $1.16 billion as the contribution from its core port division was boosted by higher box-handling rates in the mainland. The counter closed on Friday at $19.40.
