Contents page
Summary and investment case 3
— Low impact from US recession and potential global slowdown .............................4
— Low earnings downside risk .................................................................................6
— Port stocks offer good downside protection ..........................................................6
— Much of the bad news is priced in ........................................................................9
— Stock ratings ........................................................................................................9
Company Pages 11
China Merchants Hldg 12
— Revisiting our earnings forecasts........................................................................13
— Sensitivity analysis .............................................................................................14
— Price target derivation and rating........................................................................14
— Well diversified port portfolio with strategic focus................................................15
— Recent developments ........................................................................................18
— Potential restructuring in West Shenzhen Port area ...........................................19
— Solid business outlook........................................................................................20
Shanghai International Port (Group) 24
— Investment Thesis..............................................................................................25
— SIPG’s positives.................................................................................................25
— Risk analysis......................................................................................................25
— Key catalysts......................................................................................................26
— Valuation and price target ..................................................................................26
Shenzhen Chiwan Wharf - A 29
— Earnings forecast update ...................................................................................30
— Sensitivity analysis .............................................................................................31
— Price target derivation and rating........................................................................32
— Container growth slowdown ...............................................................................35
— Bulk—a slow year in 2007..................................................................................36
— The Machong project—better use of limited resources.......................................37
— Competition in the region rising moderately........................................................37
— Further developments ........................................................................................38
Yantian Port Holdings 42
— Earnings forecasts .............................................................................................43
— Sensitivity analysis .............................................................................................44
— Price target derivation and rating........................................................................44
— Unexciting business outlook...............................................................................46
— West Harbour—23% stake in exchange for quality throughput ...........................47
— Wutong Tunnel—a possible deal with the government? .....................................47
— Injection of Yantian Phase III not likely in the short term.....................................47