CICC: Maintains SHENZHEN INT'L Outperform Industry Rating, Target Price HKD 9.38

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that it maintains its profit forecast for Shenzhen International (00152) for 2025 and 2026. The current stock price corresponds to a price-to-earnings ratio of 5.1 times for both 2025 and 2026. It maintains an outperform rating and a target price of HKD 9.38, corresponding to a price-to-earnings ratio of 6.3 times for 2025 and 6.3 times for 2026, indicating an upside potential of 23.8% compared to the current stock price. CICC's main points are as follows: 1H25 performance meets expectations The company announced its 1H25 performance: revenue of HKD 6.67 billion, a year-on-year increase of 0.9%; net profit attributable to shareholders of HKD 490 million, a year-on-year decline of 24.9%, in line with expectations. The year-on-year decline in performance is mainly due to the one-time after-tax income of approximately HKD 587 million recognized from the issuance of Huaxia Shenzhen International REIT in the same period last year. Toll roads and major environmental protection businesses stabilize and rebound, while logistics and port businesses face pressure By business segment, 1) Toll roads and major environmental protection: 1H25 toll road business revenue was HKD 2.64 billion, basically flat year-on-year, with a year-on-year increase of 4% after excluding the impact of non-recurring items, mainly driven by revenue growth from the Jiangjiang Expressway and the Jihe Expressway; 1H25 major environmental protection business revenue increased by 2% year-on-year to HKD 810 million, turning a profit with a net profit of HKD 95.32 million; benefiting from fair value changes and a significant decrease in financial expenses, profit attributable to shareholders increased by 12% year-on-year to HKD 480 million. 2) Logistics parks and logistics services: 1H25 logistics park business revenue increased by 5% year-on-year to HKD 790 million, but profit attributable to shareholders decreased by 90% year-on-year to HKD 55.91 million, mainly due to a high base from last year's public REIT issuance and several projects being in the cultivation period, putting pressure on profits; 1H25 logistics services revenue increased by 47% year-on-year to HKD 200 million, with a loss attributable to shareholders of HKD 47.98 million, mainly due to business restructuring, intensified competition, and rising operating costs; 3) Ports: 1H25 revenue decreased by 13% year-on-year to HKD 1.39 billion, with profit attributable to shareholders down by 72% year-on-year to HKD 12.04 million, mainly due to a slowdown in market demand and intensified competition, coupled with increased depreciation and amortization costs from the commissioning of the Jingjiang Port project. 4) Logistics park transformation and upgrading: 1H25 revenue increased by 9% year-on-year to HKD 68.74 million, with profit attributable to shareholders of HKD 200 million, benefiting from the recognition of property sales income from the Qianhai residential project. Looking ahead, the large and small closed-loop model of logistics parks is expected to continue contributing to performance The company is actively revitalizing its existing assets. Under the large closed-loop model, the first phase of retained land for the South China logistics park is expected to confirm after-tax income of HKD 2.367 billion in 2024. Referring to the Qianhai project, CICC believes that the transformation and upgrading of the South China logistics park project will gradually release land appreciation income and development income, continuously enhancing the company's performance over the next 6-8 years. Under the small closed-loop model, CICC believes the company will continue to promote the public REIT expansion and private fund issuance of logistics park assets to achieve cash flow and obtain appreciation income. Stable dividends with attractive dividend yield The company's dividend policy is stable, with an average dividend payout ratio of 51% over the past five years. Based on CICC's profit forecast, assuming a 50% dividend payout ratio, the current price corresponds to a dividend yield of 9.7%/9.7% for 2025/2026, which is attractive Risk Warning: Intensified competition in the logistics and warehousing market, capital expenditures exceeding expectations, and the transformation progress of South China logistics parks not meeting expectations