COSCO Shipping Holdings ("CSH" or the "Company") is a leadingplayer in both container shipping and ports operation. In terms of TEUcapacity, CSH was the third largest carrier globally. In terms of total containerthroughput, CSH was the largest terminals operator worldwide.
CSH is expected to benefit from its broad market share, synergybetween different business segments, a more concentrated shippingindustry and China's BRI strategy. Since 2016, CSH experienced businessrestructuring on the back of the merger between COSCO Shipping and ChinaShipping, to focus on the container shipping area. In addition, the acquisitionof OOIL also largely expanded the Company's capacity which provided largerroom for routes and terminal network optimization. On the other hand,improvement in industry concentration should lead to a more stable freightrate. We saw ocean freight rate hold up better than expected during theCOVID-19 outbreak period. We believe, by leveraging synergy betweenCSH's different business segments and China's BRI strategy, CSH may enjoyhigher volume and profit growth compared with the industry average.
However, potential change of international trade network also bringsuncertainty to the industry’s prospects.
We forecast the Company’s revenue for 2020 to 2022 to reachRMB150,871 mn/ RMB155,042 mn/ RMB157,856 mn, respectively, withYoY growth of 0.2%/ 2.8%/ 1.8%, respectively. Net profit to shareholdersfor 2020 to 2022 is expected to reach RMB1,867mn/ RMB2,222 mn/RMB2,461 mn, respectively.
We initiate with "Accumulate" rating and TP of HK$4.40, representing26.0x/ 21.9x/ 19.8x PER and 1.6x/ 1.5x/ 1.4x PBR for 2020-2022.