In the first 11 months of 2018, YoY growth of CMP's throughput sloweddown, and we expect the situation to continue in 2019. Affected by theSino-U.S. trade war, the Company's YTD throughput rose 6.0% YoY, lowerthan the 7.4% full-year growth of 2017. Excluding impact of the newlyacquired projects, CMP's YTD throughput grew 4.3% YoY. Overseascontinued to outperform domestic. We expect CMP's major operation to staystable. Due to potential continuation of the trade war, CMP's domesticthroughput growth may further decelerate in 2019.
After completion of equity transfers with SCW, CMP is expected tofocus on expanding qualified overseas projects. In addition to divesting itsterminal operations in Shenzhen Chiwan Port Area, CMP still holds andparticipates in key hub terminals of China's five major port zones. Since thereis homogenization of density among these areas, China is optimizing theframework, while resource integration could take a long time （3-5 years）。
Compared with peers, CMP's layout along the “Belt and Road” is morecomplete. Meanwhile, CMP has deeper experience in integrated logisticsand financing services in port areas. We believe that the “port-zone-city” model to bring stable throughput in the long run among emerging countries,which may help to enhance CMP's diversification and competitiveness in thecontext of slowing domestic throughput growth.
Reiterate “Accumulate” rating and adjust TP to HK$16.15. CMP’s portresources are still balanced, and we favor CMP's overseas developmentcapability after solving horizontal case with SCW. As the leader in theChinese port industry, CMP’s current valuation remains attractive. Our TPrepresents 7.2x, 8.0x and 7.6x 2018-2020 PER.