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China Port Sector -Mapping the competition landscape and growth outlook for the southern ports
● Hutch’s port spin-off deal has triggered investors’ interests in
volume growth outlook and competition landscape for PRD ports.
● The container terminal industry is more crowded in the south than
other places in China with a few major ports there, including HK,
Yantian (East SZ), Shekou/Chiwan/Dachan (West SZ) and
Nansha (Guangdong), all serving the PRD manufacturing hub.
● We are more cautious on HK’s volume growth and expect it to
continue to lose market share to the nearby Chinese ports, given
the latter’s low cost advantage. HK achieved a mere 2.7% volume
CAGR in 2001-10 versus 18.9% at Shenzhen.
● We expect 8-10% volume growth for Shenzhen to be achievable
in 2011 given our view on global trade growth. Further, we believe
Nansha, an emerging player in international trade, may
demonstrate fastest growth in future, given its lowest handling
fees in the area.
● Among the stocks, we estimate CMHI has roughly 42% earnings
and 36.7% NAV from West Shenzhen and MTL (HK), while CP
has roughly 26.1% earnings and 25.1% NAV from Yantian,
Cosco-HIT (HK) and Nansha.
The competitive landscape in PRD
The container terminal industry is more crowded in the south than other
places in China with a few major ports owned and operated by different
parties, serving the same hinterland, the PRD manufacturing hub.
These ports include HK by Hutch (00013.HK, Outperform) and Wharf
(0004.HK, Outperform), Yantian in East Shenzhen by Hutch again,
Shekou and Chiwan in West Shenzhen by CMHI and Dachan by Wharf
and Nansha in Guangdong province by Guangzhou Port Group and CP,
With the emergence of Shenzhen port, HK continued to lose market
share to Shenzhen in the past decade. In 2001-10, HK posted a
volume CAGR of 2.7% compared to 18.9% at Shenzhen.
We are more cautious on HK’s volume growth and expect it to
continue to lose market share to the nearby Chinese ports, given the
latter’s low cost advantage and quick catch-up in service/efficiency.
We think 8-10% volume growth for Shenzhen to be achievable in
2011 given our more positive view on global recovery/container trade.
Further, we view Nansha, an emerging player in international trade
business, may demonstrate fastest growth in future, given its lowest
handling fees in the area.
CMHI and CP’s exposure to the PRD ports
Among the HK-listed Chinese port stocks, CMHI and CP have
exposure to the PRD ports, with CMHI mainly in West Shenzhen
(Shekou and Chiwan) and MTL (HK), while CP in Yantian, Cosco-HIT
(HK) and Nansha.
We estimate CMHI will have roughly 42% earnings and 36.7% NAV
from West Shenzhen and MTL (HK), while CP has roughly 26.1%
earnings and 25.1% NAV from Yantian, Cosco-HIT and Nansha.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
China Port Sector -Mapping the competition landscape and growth outlook for the southern ports
● Hutch’s port spin-off deal has triggered investors’ interests in
volume growth outlook and competition landscape for PRD ports.
● The container terminal industry is more crowded in the south than
other places in China with a few major ports there, including HK,
Yantian (East SZ), Shekou/Chiwan/Dachan (West SZ) and
Nansha (Guangdong), all serving the PRD manufacturing hub.
● We are more cautious on HK’s volume growth and expect it to
continue to lose market share to the nearby Chinese ports, given
the latter’s low cost advantage. HK achieved a mere 2.7% volume
CAGR in 2001-10 versus 18.9% at Shenzhen.
● We expect 8-10% volume growth for Shenzhen to be achievable
in 2011 given our view on global trade growth. Further, we believe
Nansha, an emerging player in international trade, may
demonstrate fastest growth in future, given its lowest handling
fees in the area.
● Among the stocks, we estimate CMHI has roughly 42% earnings
and 36.7% NAV from West Shenzhen and MTL (HK), while CP
has roughly 26.1% earnings and 25.1% NAV from Yantian,
Cosco-HIT (HK) and Nansha.
The competitive landscape in PRD
The container terminal industry is more crowded in the south than other
places in China with a few major ports owned and operated by different
parties, serving the same hinterland, the PRD manufacturing hub.
These ports include HK by Hutch (00013.HK, Outperform) and Wharf
(0004.HK, Outperform), Yantian in East Shenzhen by Hutch again,
Shekou and Chiwan in West Shenzhen by CMHI and Dachan by Wharf
and Nansha in Guangdong province by Guangzhou Port Group and CP,
With the emergence of Shenzhen port, HK continued to lose market
share to Shenzhen in the past decade. In 2001-10, HK posted a
volume CAGR of 2.7% compared to 18.9% at Shenzhen.
We are more cautious on HK’s volume growth and expect it to
continue to lose market share to the nearby Chinese ports, given the
latter’s low cost advantage and quick catch-up in service/efficiency.
We think 8-10% volume growth for Shenzhen to be achievable in
2011 given our more positive view on global recovery/container trade.
Further, we view Nansha, an emerging player in international trade
business, may demonstrate fastest growth in future, given its lowest
handling fees in the area.
CMHI and CP’s exposure to the PRD ports
Among the HK-listed Chinese port stocks, CMHI and CP have
exposure to the PRD ports, with CMHI mainly in West Shenzhen
(Shekou and Chiwan) and MTL (HK), while CP in Yantian, Cosco-HIT
(HK) and Nansha.
We estimate CMHI will have roughly 42% earnings and 36.7% NAV
from West Shenzhen and MTL (HK), while CP has roughly 26.1%
earnings and 25.1% NAV from Yantian, Cosco-HIT and Nansha.
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