China Merchants Port's （CMP, or the "Company"） 2020 results beat our expectation. Mainly thanks to the increase in overseas revenues, the Company's revenue increased by 0.5% YoY to HK$8,945 mn in 2020, basically in line with expectation. Due to throughput recovery in 2H20, CMP's container throughput in Greater China was up 0.8% YoY in 2020, while container throughput from overseas terminals surged by 38.5% YoY on the back of new acquired terminals. In 2020, CMP's net profit to shareholders decreased by 38.4% YoY to HK$5,151 mn in 2020. If excluding the one-off gains, adjusted net profit to shareholders slightly decreased by 0.1%, beating our expectation and market consensus.
　　We expect CMP to benefit from better foreign trade outlook and terminals portfolio optimization. We expect China's foreign trade momentum to support CMP's throughput growth, especially for its overseas-oriented terminals. After terminals expansion through investment in Terminal Link, we think CMP has a comprehensive global terminals network which benefits its long-term growth. In addition, we expect that CMP's internal resources integration will gradually improve its ROE level.
　　Maintain "Accumulate" rating and revise up TP to HK$15.40. With the impact of the pandemic easing, CMP's valuation has gradually recovered since 4Q20. Given a brighter outlook for foreign trade in 2021 and CMP's around 0.5x PBR, we expect the Company's valuation to continue to recover. Our TP represents 0.6x/ 0.6x/ 0.6x 2021-2023 PBR.