China ports Report Interpretation

Overview

This China ports sector update combines 1H26 results with revised throughput and pricing assumptions. Goldman Sachs expects volume growth to slow in 2H26 but sees ASP support from a more favorable cargo mix, RMB appreciation and, at selected terminals, tighter capacity and congestion-related pricing power.

Core views

Goldman Sachs slightly raises its forecast for Mainland China port container-throughput growth to 4.7% YoY in 2026E, while retaining 3.6% growth forecasts for 2027E and 2028E. The 2026E forecast implies a deceleration to 3.6% YoY in 2H26 from 5.7% in 1H26. The report links this moderation to expected export-volume growth slowing from 7.8% YoY in 1H26 to 5.3% in 2H26 and around 5% in 2027, an NRF forecast for US container imports to decline 0.8% YoY in 2H26 as an early peak season ends, and potential China-EU trade friction. The EU accounted for 15% of China exports in 2025. In 7M26, total China port throughput rose 4.9% YoY: foreign trade grew around 6% while domestic trade declined by a low single-digit rate. Management teams generally guide to low-to-mid-single-digit volume growth, with COSCO Shipping Ports recording 7.9% YoY throughput growth in 1H26 and 5.4% YoY in July. The report’s more constructive pricing view rests on cargo mix and currency as well as contract-rate increases. Higher-value foreign-trade containers, including EV and lithium-battery shipments, command premiums relative to lower-margin transshipment and domestic boxes. COSCO Shipping Ports reported 1H26 ASP growth of 3.2% YoY in RMB at Chinese terminals and 2.1% in EUR at European terminals; the implied 2Q26 growth was 6-7% and 3-4%, respectively. China Merchants Port Holdings reported 8.3% YoY blended ASP growth in 1H26, including domestic and overseas tariff increases of 2-3% and 3-4%. For 2H26, management expects inflationary domestic contract-rate growth and stronger overseas pricing, while a favorable mix and RMB appreciation should support blended ASP. For 2027E, Goldman Sachs believes high-growth terminals such as Qingdao and Shenzhen may have scope to raise contract prices; China Merchants Port Holdings also hopes domestic terminal ceiling prices can be revisited after remaining stable since the approximately 10% increase in 2022. Congestion is an additional factor in the pricing and earnings outlook. Persistent European congestion reflects limited port investment relative to shipping-line capacity deployment. East China and Philippine congestion, especially around Shanghai, is generally viewed as temporary and weather-related, though Shanghai’s hub role can transmit disruption across supply chains. Congestion in West Africa and South Asia is linked to rerouting around geopolitical uncertainty in the Red Sea and Strait of Hormuz. Goldman Sachs expects weather-related disruption to ease seasonally, but considers congestion caused by geopolitical disruption and regional underinvestment potentially persistent; that could support storage income and pricing power at well-located terminals. The 1H26 results were mixed but broadly supported updated forecasts. COSCO Shipping Ports reported 2Q26 net profit of US$188 million, up 92% YoY, including a US$52 million one-off provision reversal; excluding one-offs and Chancay’s ramp-up loss, management indicated low-single-digit core-earnings growth, broadly in line with expectations. SIPG reported 2Q26 adjusted net profit of RMB3.9 billion, up 8% YoY and ahead of Goldman Sachs estimates, helped by 1H26 blended ASP growth of 5% and modestly higher associate/JV investment income. China Merchants Port Holdings’ 1H26 recurring net profit was HK$4.0 billion, up 9% YoY, as better revenue was partly offset by staff relocation and early-retirement costs. HPHT slightly exceeded estimates on better ASP at Yantian. Cost and utilization are important differentiators. At COSCO Shipping Ports, Chancay-related depreciation and interest expense are about US$8 million per month, 60% borne by the company; management expects the terminal to break even at 55% utilization versus 36% currently. Automation could reduce unit handling costs by about 10%, while electrifying applicable equipment could lower fuel costs. For China Merchants Port Holdings, the relocation and early-retirement costs were one-off in 1H26; wage growth is guided at 3-4% YoY in 2026E, with lower headcount and automation intended to mitigate the impact. After incorporating 1H26 results and revised throughput and ASP assumptions, Goldman Sachs changes 2026-28E net-profit forecasts by between -7% and +21%. It rolls target prices forward to 2027E: China Merchants Port Holdings to HK$16.9 from HK$15.4, COSCO Shipping Ports to HK$6.9 from HK$6.6, SIPG to RMB4.9 from RMB4.7, and HPHT to US$0.23 from US$0.22. The report maintains Buy on COSCO Shipping Ports because of continued tariff increases, parent-driven volume growth, overseas expansion, strong European-terminal performance and Chancay’s ramp-up. It remains Neutral on China Merchants Port Holdings and HPHT, while retaining Sell on SIPG, where near-term associate-income pressure and large capital-expenditure requirements outweigh tariff and hinterland-growth upside.

Analysis framework

The report starts with top-down trade, export and import-volume indicators to set sector throughput assumptions, then tests those assumptions against port-management guidance and monthly data. It assesses ASP through tariff changes, cargo mix, congestion and RMB effects; incorporates reported earnings and cost drivers; and updates company forecasts and 12-month price targets using DCF or SOTP/NAV valuation methods.

Methodology notes

• Industry AnalysisSupply-demand framework

  Port throughput, trade flows, capacity and congestion analysis

  Goldman Sachs connects export and import demand, domestic versus foreign-trade cargo, port capacity and congestion to expected throughput growth and terminal pricing power.

• Industry AnalysisVolume-price decomposition

  Throughput-volume and ASP analysis

  The report separates volume growth from ASP changes, explaining how cargo mix, tariff increases and RMB appreciation can influence port revenue even as throughput growth moderates.

• Valuation methodsDCF (Discounted Cash Flow)

  DCF valuation for SIPG and HPHT

  The report derives SIPG and HPHT target prices from discounted future cash flows, using stated WACC and terminal-growth assumptions where provided.

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  SOTP-derived 2027E NAV valuation for China Merchants Port Holdings and COSCO Shipping Ports

  The report values the companies’ underlying port and investment assets separately to derive 2027E NAV-based target prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• COSCO Shipping Ports Ltd. (1199.HK)

  Preferred covered port operator; Goldman Sachs maintains Buy.

  Strengths

  European-terminal performance, Chancay ramp-up, parent-driven volume growth, tariff increases, overseas expansion and an approximately 5% FY26E dividend yield.

  Weaknesses

  Chancay is still loss-making during ramp-up and carries depreciation and interest costs.

  Comparison

  The report considers its dividend yield above mid-cycle and inexpensive relative to its defensive business model and expected DPS growth.

  Risks

  Worse-than-expected global trade and poor execution in overseas M&A.

• China Merchants Port Holdings (0144.HK)

  Covered operator rated Neutral.

  Strengths

  Shanghai and Shenzhen exposure may gain market share from Hong Kong, while tariff hikes can pass inflation through to shipping lines.

  Weaknesses

  Its major associate SIPG accounted for 59% of 2024 earnings and may face profit contraction in shipping and property.

  Comparison

  Target price is based on 2027E NAV derived from SOTP valuation.

  Risks

  Escalation of US tariffs on China goods and lower-than-expected throughput volume.

• Shanghai International Port Group (600018.SH)

  Covered operator rated Sell.

  Strengths

  Potential port-tariff upside and a strong hinterland economy.

  Weaknesses

  Near-term investment income from shipping liners may decline; large Yangshan Phase V capital expenditure could pressure dividend capacity.

  Comparison

  The report views the valuation as stretched at a 4% dividend yield versus 7% offered by other high-dividend port and expressway names.

  Risks

  Risks cited as upside include faster global containerized-trade growth, stronger liner-associate profitability, higher ASP hikes and lower Yangshan Phase V capex.

• Hutchison Port Holdings (HPHT.SI)

  Covered operator rated Neutral.

  Strengths

  Better ASP at Yantian and an undemanding valuation around its historical FY26 dividend-yield average of about 8% for 2017-2022.

  Weaknesses

  Yantian volume growth may be offset by Hong Kong volume decline; tariff-hike room is limited and one-off storage income may fall as congestion eases.

  Comparison

  Goldman Sachs uses a DCF-based US$0.23 target price with a 10.2% WACC and 1.0% terminal growth rate.

  Risks

  Changes in US-China trade tensions, domestic policy on port charges and interest-rate hikes.

Key data

• Mainland China container throughput growth4.7% YoY in 2026E; 3.6% YoY in 2027E and 2028EThe 2026E forecast implies 3.6% YoY growth in 2H26 versus 5.7% in 1H26.
• China export-volume growth5.3% YoY in 2H26Expected to moderate from 7.8% YoY in 1H26; subsequent years are expected at around 5% growth.
• US container imports-0.8% YoY in 2H26NRF forecast cited by the report, reflecting the winding down of an earlier-than-usual peak season.
• China port throughput in 7M26+4.9% YoYForeign trade was up around 6% YoY, while domestic trade declined by a low single-digit rate.
• COSCO Shipping Ports 2Q26 net profitUS$188 million, +92% YoYIncluded a US$52 million one-off provision reversal.
• SIPG 2Q26 adjusted net profitRMB3.9 billion, +8% YoYAhead of Goldman Sachs estimates, aided by ASP and associate/JV investment income.
• China Merchants Port Holdings 1H26 recurring net profitHK$4.0 billion, +9% YoYBetter topline growth was partly offset by relocation and early-retirement costs.
• Chancay breakeven utilization55%Management expectation versus current utilization of 36%.

Impact & implications

Goldman Sachs expects China ports to remain a slower-growth volume story in 2H26, but believes pricing and mix can cushion earnings. It sees the strongest sector opportunity in COSCO Shipping Ports, while viewing SIPG’s valuation and capital-expenditure needs more cautiously and holding neutral views on China Merchants Port Holdings and HPHT.

Risks

• China-EU trade friction could intensify, weighing on China export volumes and port throughput.
• US container imports may decline more than expected as peak-season demand fades.
• Congestion-related storage income may decline as weather-related congestion eases.
• COSCO Shipping Ports faces risks from weaker global trade and overseas M&A execution.
• China Merchants Port Holdings faces risks from higher US tariffs on China goods and weaker-than-expected throughput.
• HPHT faces risks related to US-China trade tensions, port-charge policy and interest-rate changes.