Company Profile

Ningbo Zhoushan Port Company Limited, formerly Ningbo Port Company Limited, is a China-basedcompany, principally engaged in the operation of ports. The Company's businesses include containerloading and unloading, iron ore loading and unloading, crude oil loading and unloading, other cargoloading and unloading, comprehensive logistics and other business. The Company is also engaged inthe trading sales. The Company mainly conducts its businesses within domestic markets. (Source:

Reuters)

Event

On November 27th 2020, Ningbo Zhoushan Port Company Limited (the company) made anannouncement on share acquisition and related transactions.

Comments

The company plans to pay CNY 5.64 billion in consideration of acquiring shares of competitive assetsincluding Jiaxing Port Holdings Group, Jiaxing Port Services Company, Wenzhou Port Group, Yiwu PortCompany Limited, and Zhejiang Toumen Port Services Company Limited.

All the port assets in this transaction are in Zhejiang Province, with the total assets standing at CNY12.09 billion, net assets of CNY 5.12 billion, revenue of CNY 1.45 billion, and net losses of CNY 140million in 2019. The combined assets in the first seven months of 2020 reached CNY 12.44 billion, netassets of CNY 5.47 billion, revenue of CNY 760 million, and net profits of CNY 300 million.

Based on a static calculation of the company and the competitive assets in 2019, after thetransaction, the company’s total assets of consolidated statements will increase CNY 6.45 billion, arise of 8.99%, and its revenue will expand CNY 1.447 billion, a growth of 5.95%.

After the transaction, the company’s consolidated statements will cover five more wholly-ownedsubsidiaries. The injection of port assets is conducive to fully making good use of coastal ports toparticipate in competition, optimizing resources allocation. The new landscape for port developmentis beneficial to optimize airline layout and logistics routes, improving cargo collection systemconstruction. It will also help the company expand business, promoting market shares in the Provinceand keeping steady growth of its cargo throughput.

Earnings forecast and investment recommendationGiven the changes in capital stock and revised earnings forecast, we revised down its EPS. Its EPS isestimated to be CNY 0.21 in 2020, CNY 0.23 in 2021, and CNY 0.24 in 2022, implying a P/E ratio to be17.9X, 16.4X and 15.4X, respectively and its PB to be 1.1X in 2020. Reiterate “Outperform”.

Potential risks

deterioration of China’s foreign trade; uncertainties of integration effects of ports; safety accidents;political risks

This English translation of the original Chinese version <进一步整合省内港口资产，提升整体竞争力> issued by Industrial Securities on December 17, 2020 is for information purpose only. In case of adiscrepancy, the Chinese original will prevail.