UBS: CMPort: 2025 profits dragged by non-recurring items, steady 2026 container volume and tariff growth
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UBS maintains a Buy rating on China Merchants Port Holdings (0144.HK) and raises the target price from HK$17.40 to HK$18.00 based on a sum-of-the-parts valuation. In 2025, the company's net profit declined 18.5% to HK$6.511 billion, primarily impacted by non-recurring items. These included a 22% drop in SIPG's associated profits, credit impairment losses of HK$202 million, and the absence of the HK$475 million equity investment gain recorded in 2024. However, excluding these one-off items, underlying net profit still achieved high single-digit growth.
Core operational performance remained strong, with recurring EBIT at controlled ports growing 20% year-over-year. Domestic ports posted an 18% increase while overseas ports surged 21%, driven by volume growth, tariff improvements, and cost savings. For 2026, management guided for low single-digit container throughput growth across both domestic and overseas terminals. The company expects domestic tariffs to rise 1% to 2% and overseas tariffs to climb 3% to 4%, complemented by ongoing efficiency initiatives.
CMPort also increased its minimum dividend payout ratio from 40% to 45%. Actual payout ratios for 2025 and 2026 are projected at 47% and 48%, respectively, translating to appealing dividend yields. UBS upgraded its 2026 and 2027 EPS forecasts by 5% and 3%, citing better than expected domestic volume growth during the first two months of 2026 and approximately 3 percentage points of upward revision in EBIT margin assumptions. At the current share price of HK$14.81, the stock trades at an attractive valuation of 0.5x 2026E price-to-book.