CICC has released a research report updating its outlook on China Merchants Port (00144). The firm raised its 2026 revenue forecast for the company by 3.42% to HK$14.25 billion, citing better-than-expected revenue per TEU. However, due to impairment losses booked by an associate company in the first half of the year, the 2026 net profit estimate was kept largely unchanged. Looking ahead to 2027, CICC lifted its net profit projection by 7.37% to HK$8.42 billion, driven by anticipated growth in both container volume and revenue per TEU. The current share price corresponds to 8.8 times 2026 earnings and 8.2 times 2027 earnings. The brokerage maintained its Outperform rating and raised the target price by 9.09% to HK$18 per share, reflecting 9.7 times 2026 earnings and 9 times 2027 earnings. This implies an upside of 9.69% from the current share price.

1H26 Port Operations Beat Expectations

In the first half of 2026, the company reported revenue of HK$7.297 billion, up 13.0% year-on-year. Net profit attributable to shareholders reached HK$3.832 billion, translating to earnings per share of HK$0.913, a 6.9% increase year-on-year. CICC noted that the port operations core profit exceeded its estimates, primarily due to higher-than-expected revenue per TEU. The company maintains a healthy cash flow position, with operating cash flow rising 15% year-on-year in line with operating profit growth. The interim dividend remains unchanged at HK$0.25 per share.

During the first half, the port segment's revenue and profit grew 13.2% and 17.7% year-on-year, respectively, which CICC attributes to simultaneous growth in container volume and revenue per TEU across its controlled and associated terminals. Container throughput at these terminals rose 4.5% year-on-year, with controlled terminals contributing a 3.5% increase. Regionally, container volumes in the Pearl River Delta, Yangtze River Delta, Bohai Rim, and overseas terminals changed by +1.5%, +6.4%, +7.0%, and +2.5% year-on-year, respectively. The port segment's revenue growth outpacing controlled terminal volume growth (13.2% vs. 3.5%) is attributed to higher terminal tariffs and an improved container mix, which boosted revenue per TEU.

Growth Outlook and Strategic Positioning

Looking forward, CICC believes the company's cargo volumes are well-positioned to maintain solid growth, supported by increasing AI-related product shipments, accelerating exports of China's high-end manufacturing, and growth in emerging market economies. On the pricing front, the brokerage expects overseas terminal tariffs to continue rising, while revenue per TEU should benefit from ongoing container mix optimization. Additionally, CICC is optimistic about the company's ability to enhance profitability through lean operations, including streamlined port processes, higher automation rates, and disciplined cost management.

Key Risks

The main risks to the investment thesis include geopolitical changes and a potential slowdown in global economic growth.