China Merchants Port Group Co., Ltd. (hereinafter referred to as "China Merchants Port" or "the Company") announced on the evening of April 3 that the Company held an analyst meeting on the same day. At the meeting, China Merchants Port revealed that the company has continued to build three basic platforms (China Merchants Core, China Merchants ePort, and SMP) that have all been launched, which has effectively supported the business development of China Merchants Port and improved the port's customer service capabilities, production and operation capabilities, enterprise management capabilities, and ecological carrying capacity. Overall, the company has completed the first phase of digital construction: the initial construction of a digital investment port.
Screenshot of the announcement of China Merchants Port
China Merchants Port introduced the performance and development of the company's 2023 annual report to investors. In 2023, the company achieved an operating income of 15.75 billion yuan, a total profit of 8.80 billion yuan, and a net profit attributable to the parent company of 3.57 billion yuan, a year-on-year increase of 6.98%, a record high. In 2023, the company completed a container throughput of 180.195 million TEU, a year-on-year increase of 23.5%, and a bulk cargo throughput of 1.25 billion tons, a year-on-year increase of 69.6%, mainly benefiting from the company's inclusion of Ningbo Port's business volume in the statistics since October 2022, which brought the company a business increase of 31.374 million TEU of container throughput and 490 million tons of bulk cargo throughput in 2023.
Overall, in 2023, the company's production and operation will make steady progress, its lean operation capabilities will be significantly improved, breakthroughs will be made in Southeast Asia, and gratifying results will be achieved in home port construction, market expansion, scientific and technological innovation, deepening reform, and ESG construction.
The following are the main contents of the investor relations activities:
1. As the world's leading port investment and development operator, please introduce the relevant overseas business layout, overseas terminal operation, and future overseas development plan?
A: Since the company began to expand overseas markets in 2008, after more than 10 years of hard work, the company has invested and operated 51 ports in 26 countries and regions on 6 continents around the world, basically forming a relatively complete global network layout of ports, logistics and parks. In 2023, the company's overseas business revenue accounted for 30.4% of the company's total revenue, and overseas business has become the company's main business segment. The company focuses on building CICT, an overseas home port in Sri Lanka, into an international container hub port and HIPG into a regional comprehensive port. In the future, the company will continue to build an integrated operation model of Sri Lanka's home port, achieve rapid business development, and accelerate business cooperation with shipping companies. The company continued to optimize its overseas layout and stabilize the comprehensive development of overseas business. We will give full play to the influence of overseas terminals in the region, strengthen the expansion of the regional market, continue to promote port industry projects, improve the efficiency of overseas project management and improve the quality and efficiency of overseas terminals, and increase overseas business revenue by improving the overseas management and control system.
2. Concerned about the company's investment in Sri Lanka to build a South Asia trade and logistics center, how does the company view the risks and prospects of investing in Sri Lanka?
A: South Asia has a large population and huge demand potential, but there is a lack of large-scale international distribution centers in the region. As the largest port in Sri Lanka, the Port of Colombo has always been a major hub port in South Asia, ranking among the top 20 in the world in terms of perennial transit network connection convenience, with obvious geographical advantages. At present, the port warehousing and logistics facilities in the Port of Colombo are in serious short supply, and the strategic location of the Port of Colombo has not been fully utilized. One of the main objectives of the Sri Lanka Port Master Plan is to make the Port of Colombo a logistics hub, and the project will make full use of the advantages of Sri Lanka's free port policy and its geographical location, configure advanced logistics facilities, and carry out import and export unpacking, international consolidation, bonded warehousing, free port business (such as simple processing, entrepot trade, supply chain management and other value-added services), FCL unpacking, warehouse leasing, office building leasing, port trade logistics and other businesses. It will not only improve the level of logistics services in Sri Lanka, but will also attract more business and throughput to the Port of Colombo, thereby generating more revenue for the Port of Colombo and port-related businesses, and strengthening the Port of Colombo's position as a hub.
3. With the rapid development of new technologies such as artificial intelligence, what are the focus of the company's digital transformation and development?
Answer: With the continuous deepening of digital transformation, the company has continuously built three basic platforms (China Merchants Core, China Merchants ePort, and SMP) that have all been launched, which has effectively supported the business development of China Merchants Port and improved the port's customer service capabilities, production and operation capabilities, enterprise management capabilities, and ecological carrying capacity. Overall, we have completed the first phase of digital construction: the initial construction of a digital investment port.
In the next three years, China Merchants Port will take value creation as its purpose and achieve the goal of digital China Merchants Port. CMPort will unswervingly promote the digital transformation and upgrading of the industry, build a smart, green and safe port, comprehensively improve the technical level, production efficiency, quality and efficiency, and accelerate the development of strategic emerging industries, break through supply-side barriers, and achieve high-quality and sustainable development.
China Merchants Port will implement digitalization through two major measures: strengthening the foundation and promoting application. Strengthening the foundation refers to strengthening the data foundation, technical foundation and security infrastructure, improving the ability of port data governance, strengthening the accumulation of key core technologies in the industry, continuously optimizing the R&D system, and improving the three-dimensional protection network of port network information security. Promoting application refers to adhering to the principle of the trinity of scenarios, applications, and effects, constantly excavating typical business scenarios, doing a good job in the construction of large models of the port industry, the construction of a new generation of terminal operating systems, and other projects, so as to digitally form productivity and promote business model innovation.
4. What is the progress of the company's acquisition project in Indonesia and what are the next steps?
A: In November 2023, China Merchants Port, a subsidiary of the company, signed an acquisition agreement to acquire a 51% stake in NPH in Indonesia for US$61.2 million and will become its controlling shareholder. NPH is listed on the Indonesia Stock Exchange and operates two container terminals at the Port of Jakarta, Indonesia's largest container port. This acquisition is an important breakthrough for the company in Southeast Asia, and will further share the dividends brought by the rapid development of the RCEP region. At present, the parties to the transaction are actively implementing the preconditions for the agreement to take effect, and the transaction is scheduled to be completed in the first half of 2024. After closing, the company will work with local partners to make full use of the advantages of both parties to build NPH Group into an investment platform in Indonesia and promote other potential port and warehousing logistics projects.
5. In recent years, various regions in China have accelerated the integration of ports, how does the company view and grasp the opportunities?
Answer: In recent years, with the development of the port industry, the pace of regional port integration has accelerated, and the pattern of orderly integration and rational allocation of resources has been gradually realized from some regional overcapacity in the past to the balance of domestic port capacity supply and demand, eliminating regional vicious competition, laying a good foundation for the improvement of port charges, and contributing to the benign and sustainable development of the entire industry. As the largest port investment operator in China and the world's leading port investment operator, China Merchants Port has established a relatively complete port layout in the five major coastal port groups in China, and is the second largest shareholder of Shanghai Port and Ningbo Port. As a public terminal operator controlled by a central enterprise, the company can act as a strategic investor in the process of regional port integration, giving full play to its advantages in business synergy, capital operation and operation management. The company will continue to pay attention to and capture domestic port integration opportunities.
6. Maersk and Hapag-Lloyd will form a new "Gemini" alliance that will be operated in 2025, and a number of routes will be adjusted, will it have an impact on the company's business?
A: With the dissolution of the 2M alliance and the formation of the Gemini Alliance, the global shipping alliance has changed. The port business may face certain uncertainties due to the reorganization of shipping routes. As a global port operator, China Merchants Port can generally avoid the impact of changes in shipping alliances. At the same time, we will adopt the following strategies: on the one hand, the formation of a rapid response mechanism. Respond quickly to the dynamics of the shipping market, strengthen customer marketing and visits, share the information obtained from visits in a timely manner, and hold regular market dynamic communication meetings. In addition, stick to the long-term strategy of the market. China Merchants Port will continue to promote the marketing of key customers, adhere to and promote the construction of systems such as collection and distribution, ePort, port ecosystem, and extended customer service, and continue to improve the comprehensive capacity of the port.
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Review: Tan Lugang