China Merchants Port's ("CMP" or the "Company") 1H20 revenuedecreased by 8.7% YoY, dragged by the COVID-19 pandemic, basicallyin line with our expectation. CMP's share of profit from joint ventures andassociates significantly decreased by 23.6% YoY, which led the Company'srecurrent net profit to shareholders to decrease by 31.1% YoY, missing ourexpectation. Including net gain from resumption of certain land parcels andother one-off gains, the Company's shareholders' net profit decreased by76.3% YoY to HK$1,546 mn.
　　Strong recovery of CMP's throughput was witnessed in July, but theCOVID-19 pandemic is still expected to weigh on throughput growth.
　　As the COVID-19 pandemic is still not well contained globally, internationaltrade still faces threats given lower demand and supply. The Companycurrently has a more comprehensive terminals network and its acquisition oftwo more terminals through Terminal Link is expected to be completed in2H20. In addition, we are looking forward to accelerating development ofHambantota International Port after the introduction of a strategic investor.
　　We believe that CMP's throughput growth has relatively high potential.
　　Reiterate "Accumulate" rating and revise down TP to HK$11.00 to reflectmarket sentiment. CMP's valuation is still clouded by the COVID-19pandemic and complicated international trade situation, in which we expect itto recover once uncertainty is reduced. We think the current valuation of CMPis attractive. Our TP of HK$11.00 represents 0.5x/ 0.5x/ 0.5x 2020-2022 PBR