CSP's 3Q20 net profit to shareholders beat our expectation. Despite YoYdecline in throughput from controlling terminals, the Company's 3Q20revenue increased by 6.0% YoY due to favorable exchange rate and boxvolume structure improvement, slightly beating our expectation. Driven byincrease in equity throughput from non-controlling terminals, profit fromassociates and joint ventures increased by 12.3% YoY. In addition, given ahigher operating profit margin with lower administration costs, net profit toshareholders increased by 19.7% YoY to US$85.9 million, beating ourexpectation and market consensus.
　　CSP's refined management is expected to improve the Company'sgross profit margin. We believe that the Company's gross profit margin haspotential to improve through (1) increasing throughput in its newly operatingterminals and (2) refinery management. Meanwhile, CSP aims to increase itsbox volume proportion from third-party customers, which is expected tobenefit its revenue per TEU. Looking forward, we think CSP's overseascontainer throughput is still at risk of resurgence of COVID-19, while weexpect throughput growth in the Greater China region to be persistent in4Q20. In addition, investment in Guangxi Beibu Gulf International ContainerTerminal is expected to drive the Company’s future throughput growth.
　　Reiterate "Accumulate" rating given attractive valuation and reliabledividend policy and revise up TP to HK$5.35. CSP currently has a strongposition in cash which helps effectively resist the changing environment giventhe pandemic, and provides flexibility for potential acquisition. Reliabledividend policy given the background of the pandemic should be attractive.
　　Our TP represents 7.0x, 7.3x and 6.5x 2020-2022 PER.