COSCO SHIPPING Ports' （"CSP" or the "Company"） 2018 revenue wasUS$1 bn, up 57.6% YoY, slightly better than our expectation. Shareholders' profit was US$325 mn, down 36.7% YoY. CSP's future keydriving factor could be the incremental volume contribution by OCEANAlliance. Earnings per share was $0.10, better than our expectation, mainlybenefitting from rapid growth in overseas and OCEAN Alliance relatedthroughput （2018 throughput rose 17% YoY with 7.8% YoY endogenousgrowth）。 CSP's annual dividend payout ratio is 40%, and current dividendyield is 3.1%, constituting attractive buy-in opportunity.
Strategic synergistic effects with parent company CSH and the OCEANAlliance began are emerging. After restructuring in 2016, CSP activelypromoted synergies to attract more calling volume as it is the only underlyingport group within OCEAN Alliance. In 2018, CSP made full use of CSH's fleetscale （after acquiring OOCL （00318 HK）， CSH became the world's thirdlargest consolidator）。 2018 throughput from OCEAN Alliance increased by33.7% YoY. CSH's newly acquired OOCL only contributed about 3.3% ofCSP's 2018 throughput.
Maintain "Accumulate" rating and revise up TP to HK$9.80. Themanagement expects throughput to achieve low double-digit growth in 2019,a goal which we expect CSP can deliver. Based on throughput performancefor the first two months of 2019 and 2019 overall demand forecast, we predictthat CSP's 2019 throughput will achieve YoY growth of around 12%-13%.The current valuation is attractive. Our TP represents 9.5x, 8.4x and 7.4x2019-2021 PER.