20160216-高盛-China_Ports_Container_port_volume_-1__yoy_in_Jan_trough_P_B,but_not_P_E_yet_11页_490kb

Container Port Volume and Market Analysis Summary

Core Content

The document provides an analysis of China's container port volume performance in January 2016, comparing it to the same period in the previous year and to the previous month. It also discusses the impact of external factors on port operations, such as the Chinese New Year holiday and cold wave, and includes insights on the potential for cyclical recovery in the sector. Additionally, it highlights earnings risks and market valuations for key ports and shipping companies.

Key Findings

Container Port Volume in January 2016

• Top Eight Ports: Container port volume fell 1% yoy in January 2016, weaker than expected due to the earlier Chinese New Year holiday (Feb 7-13) compared to the previous year (Feb 18-24).
• Sequential Performance (mom): Port volume was flat mom, below the +6% seasonal average for January in prior years.
• Consistency with Trade Data: The volume decline aligns with China's trade data, which dropped 14% yoy (export -11%, import -18%).

Port-Specific Performance

• Shanghai: Volume fell 6% yoy and 3% mom. The decline is attributed to slower transpacific and intra-Asia trade, as well as a cold wave that disrupted operations.
• Shenzhen: Volume decreased 1% yoy but increased 7% mom, showing relative resilience.
• Run Rate Recovery: The port's run rate improved in the first two weeks of February, with a +3% yoy increase to 93,000 TEU per day.

HPHT Update

• Yantian Port (part of HPHT): Expected 3% volume growth for FY16, with US trade growing 3-4% yoy and Europe trade improving to a narrower decline (-3-4% in 4Q15 vs. -7% in 1H15).
• Hong Kong (HK): Port volume fell 11% yoy in 2015, and the trend is expected to continue due to reduced transshipment volumes caused by liner schedule reshuffling.
• Overall FY16 Growth: HPHT models +1.7% port volume growth for FY16, with Yantian at +3% and HK flat.

Earnings and Valuation

Earnings Risk

• Weak Throughput Trends: Recent weak port throughput poses a downside risk to consensus estimates.
• Earnings Revisions: The Street may revise earnings downward after 4Q15 results in March.
• EPS Forecasts: The author's 2015E EPS forecasts are 2-6% below Bloomberg consensus.

Valuation Metrics

• 12m Forward P/B: The sector is trading at a trough P/B of 0.7x, indicating undervaluation.
• 2016E P/E: At 12x, it is above the 10x level during the GFC in 2008 but one standard deviation below the 14x average since 2009.
• Cyclical Recovery Outlook: The report anticipates a potential cyclical recovery in port volume that could help the sector re-rate closer to mid-cycle valuations.

Preferred Stocks

• COSCO Pacific and China Merchants are highlighted as preferred stocks due to their 10.8x 2016E P/E valuation, which is more attractive compared to the sector average.

Seasonality and Historical Trends

January Seasonality

• Historical Avg: The average January mom growth is 7%.
• Shanghai: January mom growth was -3%, below the historical average.
• Shenzhen: January mom growth was +7%, showing a slight improvement.

Regional Performance

• Yangtze River Delta: Volume growth was +7% yoy.
• Bohai Rim: Volume growth was -7% yoy.
• Pearl River Delta (excl. HK): Volume growth was +6% yoy.
• Pearl River Delta (incl. HK): Volume growth was -2% yoy.

Additional Notes

• Data Sources: Data from Chineseport.cn may differ from the Ministry of Transport.
• Conflict of Interest: Goldman Sachs does business with companies covered in its research, which may affect objectivity.
• Disclosure: For detailed disclosures, refer to the Disclosure Appendix or the research page on www.gs.com.

Summary Table (Key Highlights)

Port	Jan 2016 (yoy)	Jan 2016 (mom)	FY16 Growth
Shanghai	-6%	-3%	-6%
Shenzhen	-1%	+7%	-1%
Yantian	-6%	-3%	+3%
HK (Kwai Tsing)	-11%	-6%	-11%

Key Insight	Details
Port Volume Decline	-1% yoy
Seasonal Performance	Flat mom vs. +6% avg
Impact Factors	Cold wave, earlier Chinese New Year
Earnings Risk	Downside to consensus estimates
P/B Valuation	Trough at 0.7x
P/E Valuation (2016E)	12x (above GFC 2008 level)
Cyclical Recovery Expectations	Potential volume recovery
Preferred Stocks	COSCO Pacific, China Merchants (10.8x P/E)

Conclusion

The container port volume in China experienced a 1% yoy decline in January 2016, influenced by the earlier Chinese New Year and a cold wave. While the sector is currently undervalued based on 12m forward P/B, the P/E ratio remains above the GFC level, suggesting potential for recovery. The report emphasizes the importance of port volume as a key indicator for cyclical improvement and recommends focusing on COSCO Pacific and China Merchants due to their more favorable valuations.