China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
Stock Code: 001872/201872 Stock Name: CM Port Group, CM Port Group B Announcement No. 2019-025
CHINA MERCHANTS PORT GROUP CO., LTD.
ANNUAL REPORT 2018 (SUMMARY)
Part I Important Notes
This Summary is based on the full text of the 2018 Annual Report of China Merchants Port Group Co., Ltd.
(hereinafter referred to as the “Company”). In order for a full understanding of the Company’s operating results,
financial position and future development plans, investors should carefully read the aforesaid full text on the
media designated by the China Securities Regulatory Commission (the “CSRC”).
Except for the following directors, all the other directors attended in person the Board meeting for the review of
this Report and its summary.
Reason for not attending the Proxy entrusted to attend the
Name Office title
meeting in person meeting
Deng Renjie Director Other company affairs Bai Jingtao
Song Dexing Director Other company affairs Bai Jingtao
Independent auditor’s modified opinion:
□ Applicable √ Not applicable
Board-approved final cash and/or stock dividend plan for ordinary shareholders for the Reporting Period:
√ Applicable □ Not applicable
Bonus issue from capital reserves:
□ Yes √ No
The Board has approved a final dividend plan as follows: based on the Company’s total shares of 1,793,412,378, a
cash dividend of RMB1.14 (tax inclusive) per 10 shares is to be distributed to shareholders, with no bonus issue
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
from either profit or capital reserves.
Board-approved final cash and/or stock dividend plan for preferred shareholders for the Reporting Period :
□ Applicable √ Not applicable
This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies
or misunderstandings between the two versions, the Chinese versions shall prevail.
Part II Key Corporate Information
1. Stock Profile
Stock name CM Port Group, CM Port Group B Stock code 001872, 201872
Stock exchange for stock listing Shenzhen Stock Exchange
Stock name before the change Chiwan Wharf A, Chiwan Wharf B
Contact information Board Secretary Securities Representative
Name Huang Chuanjing Hu Jingjing and Chen Dan
24/F, China Merchants Port Plaza, 1 Gongye 3rd Road, Zhaoshang Street, Nanshan,
Address
Shenzhen, PRC
Fax +86 755 26828888 +86 755 26828888
Tel. +86 755 26886666 +86 755 26886666
Email address Cmpir@cmhk.com Cmpir@cmhk.com
2. Main business of the Company during the reporting period
(1) Main business scope and business models
The Company is principally engaged in the handling, warehousing and transportation of containers and bulk
cargoes, as well as the provision of other ancillary services. It principally operates 24 container berths and 15 bulk
cargo berths in the ports in West Shenzhen, 9 multi-purpose berths, 2 container berths, 2 bulk cargo berths and a
berth for roll-on-roll-off vessels in Shantou Port, 4 multi-purpose berths in Shunde Port, 2 container berths and 6
bulk cargo berths in Zhangzhou Port, Xiamen, 3 container berths in Port of Colombo, Sri Lanka, 4 multi-purpose
berths, 2 oil berths and 4 container berths in Hambantota Port, 3 container berths in Port of Lomé, Togo, and 3
container berths in Paranaguá Port, Brazil. Moreover, the Company invests in container hubs in Shanghai and
Ningbo and expands its layout to ports in South Asia, Africa, Europe, South America and Oceania.
The major business segments of China Merchants Port Group Co., Ltd. are as follows:
Business Applications
segments
Cargo handling Container handling and warehousing: the Company provides ship berthing, loading and
and unloading services to ship companies, offers container storage service to ship companies
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
warehousing and cargo owners and provides overhead box services to tractor companies. The Company
also engages in the businesses of division or merger of cargoes in containers, container
leasing and container maintenance;
Bulk cargo handling and warehousing: the Company is engaged in bulk cargo handling and
transportation in port zones, as well as storage services in yards. The major types of
cargoes handled include food, steel, woods and sandstones.
Ancillary The ancillary port-related services of the Company mainly include tugboat berthing
port-related assistance and barge services at the arrival of ships to the ports, tallying in the course of
services cargo handling, and supply of shore power and freshwater for vessels.
The Company provides various services for clients (including logistics companies, trading
Bonded
companies or cargo owners), for example, warehouse/yard leasing, loading and unloading
logistics
in warehouses/yards, customs clearance and division or merger of cargoes at terminals. It
operations
also provides documentation services for tractors arriving or leaving the bonded logistics
parks.
(2) Development stage and cyclical characteristic of the industry in which the Company operates and its
industry position during the reporting period
The port industry is a crucial cornerstone for national economic and social progress, and is closely linked to global
economic and trade development. In 2018, the global economy maintained its growth in general. Nonetheless, the
Company faced challenges arising from the divergence in recovery between various countries, trade frictions
aggravated by trade protectionism, restructuring of global trade pattern, the slowdown in growth of global
container shipping, the downshift of domestic port business, intensifying market competition, severe competition
for investment in emerging markets overseas, technology advancement in the port and shipping industry and
evolving business models.
In light of the increasing uncertainty in the global economic and trade environment, the growth of global container
throughput slowed down in 2018. According to the statistics of Clarkson Research Services Limited, a maritime
consulting firm, the global container throughput for coastal ports amounted to 201 million TEUs in 2018,
representing a year-on-year increase of 4.46%, which was down 0.66 percentage points as compared with 2017.
Growing uncertainties in global trade development and rising fuel costs in general reduced the profitability of
shipping companies. The performance of different shipping routes varied. The shipping volume of Asia-Europe
routes decreased slightly due to the sluggish economies in the United Kingdom and other European countries. The
Sino-US trade friction resulted in cargo delivery before schedule and supported the rapid growth of shipping
volume of Trans-Pacific routes at 5.88%. Driven by booming economic development in emerging Asian
economies, the shipping volume of routes in the region maintained a relatively remarkable year-on-year increase
of 6.45%. With concentrated delivery of large vessels, the average scale of single ship expanded continuously.
While Asia-Europe routes were dominated by the three largest shipping alliances, the container feeder market saw
development opportunities.
The growth rate of global port container throughput declined in 2018. According to the statistics of Drewry
Shipping Consultants Ltd., a maritime consulting firm, the global container port throughput amounted to 7.86
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
billion TEUs in 2018, up 5.3% year-on-year, while the growth rate decreased by 1.2percentage points as compared
with 2017. In terms of market share by container throughput, the top 3 regions in order are China (including Hong
Kong), Europe and Southeast Asia, and the top 3 fastest growing regions in order are South Asia, Southeast Asia
and Oceania. The growth rate of PRC container port throughput decreased and the development of different ports
varied. According to the statistics from National Bureau of Statistics of China, the container throughput handled
by PRC ports of significant scale was 249.55 million TEUs in 2018, representing a growth of 5.2% compared with
the same period last year , growing slower than the same period in 2017.
The Company is the largest global leading port developer, investor and operator in the PRC, with a comprehensive
port network at major hub locations along coastal China. It has also established presence in South Asia, Africa,
Europe, Mediterranean, Oceania and South America. By its proactive, sound and efficient operating style, the
Company capitalises on its global port portfolio, professional management experience, the self-developed
state-of-the-art terminal operation system and integrated logistics management platform for exports and imports,
thereby providing its customers with timely and efficient port and maritime logistics services along with
comprehensive and modern integrated logistics solutions. In addition, the Company also invests in bonded
logistics operation and launches integrated park development business for the extension of the port value chain,
which allows it to create greater value through the synergies of the existing terminal network.
3. Key Financial Information
(1) Key Financial Information of the Past Three Years
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
√ Yes □ No
The retrospective restatements in the table below are caused by changes to the accounting policies and a business
combination under common control. For further information, please refer to “VI YoY Changes to Accounting
Policies, Estimates and Methods” and “VIII YoY Changes to the Scope of the Consolidated Financial Statements”
under “Part V Significant Events” in this Report.
2018-over-201
2018 2017 2016
7 change
Original Restated Original Restated Restated Original Restated
Operating revenue
2,274,934,530.82 9,703,394,622.58 2,456,218,834.63 7,544,635,284.96 28.61% 2,381,483,399.94 6,828,528,929.02
(RMB)
Net profit attributable
to the listed
403,711,043.83 1,090,418,910.77 504,495,064.39 2,365,214,907.45 -53.90% 532,376,492.97 2,041,683,125.35
company’s
shareholders (RMB)
Net profit attributable
510,911,565.95 516,155,803.81 497,361,340.01 498,373,377.67 3.57% 529,198,593.98 526,660,998.71
to the listed
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
company’s
shareholders before
exceptional items
(RMB)
Net cash generated
from/used in operating 737,784,730.57 4,288,575,424.84 1,162,281,754.31 3,475,037,036.28 23.41% 1,121,032,625.07 3,049,363,117.24
activities (RMB)
Basic earnings per
0.63 0.61 0.782 1.32 -53.79% 0.826 1.14
share (RMB/share)
Diluted earnings per
0.63 0.61 0.782 1.32 -53.79% 0.826 1.14
share (RMB/share)
Weighted average
8.82% 3.88% 10.45% 10.24% -6.36% 11.57% 9.21%
return on equity (%)
Change of 31
December
31 December 2018 31 December 2017 2018 over 31 31 December 2016
December
2017
Original Restated Original Restated Restated Original Restated
Total assets (RMB) 8,036,053,848.17 128,018,084,415.68 7,975,470,563.32 109,135,164,260.01 17.30% 7,792,570,272.01 91,437,459,066.10
Equity attributable to
the listed company’s 4,831,911,547.56 30,760,475,412.93 4,922,969,405.92 28,474,748,165.25 8.03% 4,736,680,543.81 22,680,840,458.42
shareholders (RMB)
(2) Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 2,172,750,441.44 2,499,587,599.28 2,589,330,353.39 2,441,726,228.47
Net profit attributable to the listed
381,903,088.64 238,135,317.01 276,846,536.50 193,533,968.62
company’s shareholders
Net profit attributable to the listed
company’s shareholders before 129,600,674.09 187,764,097.52 135,978,133.47 62,812,898.73
exceptional items
Net cash generated from/used in
488,161,711.35 1,312,573,007.36 1,315,345,336.41 1,172,495,369.72
operating activities
The quarterly financial data in the table above or their summations differ from what have been disclosed in the
Company’s Q1, interim and Q3 reports, primarily because the financial data in those reports have been restated
due to a business combination under common control.
4. Share Capital and Shareholder Information at the Period-End
(1) Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as
Holdings of Top 10 Shareholders
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
Unit: share
Number of
preferred
Number of
35,642 (including 35,972 (including Number of preferred shareholders
Number of ordinary
24,924 25,184 shareholders with with resumed
ordinary shareholders at the
A-shareholders, A-shareholders, and resumed voting 0 voting rights at 0
shareholders at month-end prior to
and 10,718 10,788 rights at the the month-end
the period-end the disclosure of
B-shareholders) B-shareholders) period-end (if any) prior to the
this Report
disclosure of this
Report (if any)
5% or greater shareholders or top 10 shareholders
Sharehold
Increase/decrease
Nature of ing Total shares held Restricted Unrestricted Pledged or
Name of shareholder in the Reporting
shareholder percentag at the period-end shares held shares held frozen shares
Period
e
CHINA
MERCHANTS
INVESTMENT Foreign legal
64.05% 1,148,648,648 1,148,648,648 1,148,648,648 0 0
DEVELOPMENT person
COMPANY
LIMITED
CHINA
MERCHANTS Domestic
GANGTONG
general legal 20.68% 370,878,000 370,878,000 0 370,878,000 0
DEVELOPMENT
(SHENZHEN) CO., person
LTD.
BROADFORD Foreign legal
3.08% 55,314,208 55,314,208 0 55,314,208 0
GLOBAL LIMITED person
CMBLSA RE FTIF
TEMPLETON Foreign legal
2.42% 43,445,204 -4,469,750 0 43,445,204 Unknown
ASIAN GRW FD GTI person
5496
Foreign legal
NORGES BANK 0.16% 2,802,863 0 0 2,802,863 Unknown
person
CHINA
MERCHANTS State-owned
0.15% 2,641,020 514,998 0 2,641,020 Unknown
SECURITIES (HK) legal person
CO., LTD.
Domestic
MAI SHUQING 0.13% 2,361,047 122,700 0 2,361,047 Unknown
natural person
VANGUARD
EMERGING Foreign legal
0.12% 2,229,700 -387,818 0 2,229,700 Unknown
MARKETS STOCK person
INDEX FUND
CHINA Fund, wealth
0.08% 1,495,654 735,993 0 1,495,654 Unknown
CONSTRUCTION management
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
BANK—INVESCO instrument, etc.
GREAT WALL
QUANTITATIVE
AND SELECTED
STOCK
SECURITIES
INVESTMENT
FUNDS
CANADA POST
CORPORATION Foreign legal
0.08% 1,446,906 -132,190 0 1,446,906 Unknown
REGISTERED person
PENSION PLAN
Strategic investors or general legal
person becoming top-ten shareholders N/A
due to placing of new shares (if any)
China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a wholly-owned subsidiary of
Related or acting-in-concert parties Broadford Global Limited, and Broadford Global Limited is the controlling shareholder of China
among the shareholders above Merchants Investment Development Company Limited. The Company does not know whether the
other unrestricted shareholders are related parties or not.
Top 10 unrestricted shareholders
Shares by type
Name of shareholder Unrestricted shares held at the period-end
Type Shares
CHINA MERCHANTS GANGTONG DEVELOPMENT
370,878,000 A share 370,878,000
(SHENZHEN) CO., LTD.
BROADFORD GLOBAL LIMITED 55,314,208 B share 55,314,208
CMBLSA RE FTIF TEMPLETON ASIAN GRW FD GTI B share
43,445,204 43,445,204
5496
NORGES BANK 2,802,863 B share 2,802,863
CHINA MERCHANTS SECURITIES (HK) CO., LTD. 2,641,020 B share 2,641,020
MAI SHUQING 2,361,047 A share 2,361,047
VANGUARD EMERGING MARKETS STOCK INDEX B share
2,229,700 2,229,700
FUND
CHINA CONSTRUCTION BANK—INVESCO GREAT
WALL QUANTITATIVE AND SELECTED STOCK 1,495,654 A share 1,495,654
SECURITIES INVESTMENT FUNDS
CANADA POST CORPORATION REGISTERED B share
1,446,906 1,446,906
PENSION PLAN
CHEN ZEHONG 1,240,000 A share 1,240,000
China Merchants Gangtong Development (Shenzhen) Co., Ltd. is a
Related or acting-in-concert parties among the top ten
wholly-owned subsidiary of Broadford Global Limited. The Company does
unrestricted public shareholders and between the top ten
not know whether the other unrestricted shareholders are related parties or
unrestricted public shareholders and the top ten shareholders
not.
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
Top ten ordinary shareholders conducting securities margin
N/A
trading (if any)
(2) Number of Preferred Shareholders and Shareholdings of Top 10 of Them
No preferred shareholders in the Reporting Period.
(3) Ownership and Control Relations between the Actual Controller and the Company
State-Owned Assets Supervision and Administration Commission of the State Council
100%
China Merchants Group
100%
Broadford Global Limited
3.08% 100% 74.66%
China Merchants Gangtong CMID
Development (Shenzhen) Co., Ltd.
20.68% 64.05%
5.24%
Public A-shareholders
China Merchants Port Group Co., Ltd.
Public B-shareholders
6.95%
5. Corporate Bonds
□ Applicable √ Not applicable
Part III Operating Performance Discussion and Analysis
Is the Company subject to any industry-specific disclosure requirements?
No.
1.Performance Discussion and Analysis
(1) External Environment Analysis
In 2018, the global economy continued to grow at a moderate pace. However, the growth rates of major
economies have almost peaked while certain emerging markets and countries were facing financial instability,
demonstrating intensified uneven growth trend among different economies. Currently, with the setback in
multilateral trading system, the landscape of international trade is restructuring, which has facilitated rapid
development of regional trade agreements. According to the latest “World Economic Outlook” report published
by the International Monetary Fund (“IMF”) in January 2019, the global economic growth rate of 2018 was
expected to be 3.7%, down by 0.1 percentage point as compared to 3.8% in 2017, among which, developed
economies grew at 2.3%, down by 0.1 percentage point as compared to that of 2017, while emerging markets and
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
developing economies grew at 4.6%, respectively, down by 0.1 percentage point as compared to that of 2017.
Total global trade volume (including goods and services) grew by 4.0%, representing a decrease of 1.3 percentage
points as compared to that of 2017.
In 2018, China’s economic growth was 6.6%, representing a decrease of 0.2 percentage point over 2017. Despite
the complicated international environment, China insisted on pursuing progress while maintaining stability and
the overall economic development remained stable within a reasonable range. While strenuously promoting the
supply-side structural reform, the PRC government continued to innovate and improve its macroeconomic control
policies, striving to cultivate and develop innovative industries. The Chinese economy has shifted from the rapid
growth phase to quality development phase with the driving force of innovation further increased and the upgrade
and development of consumption and industry structures progressed at a faster pace. Amid the overall global trade
growth, according to the statistics of the General Administration of Customs, China’s total foreign trade import
and export value amounted to RMB30.51 trillion in 2018, representing a year-on-year increase of 9.7%, among
which the total export value was RMB16.42 trillion, indicating a 7.1% year-on-year increase, while total import
value was RMB14.09 trillion, reflecting a year-on-year increase of 12.9%. In particular, the potential of trade
cooperation between China and those countries along the “Belt and Road” initiative is unleashing, leading to
an increase in import and export value of 13.3%, which is higher than the overall growth rate.
Driven by the growth in global economy and trade, the global port business generally showed moderate growth in
2018; and the growth rate of port business in China remained steady since the first quarter. According to the data
published by National Bureau of Statistics of China, the container throughput handled by Chinese ports of
significant scale totalled 250 million TEUs in 2018, representing an increase of 5.2% year-on-year.
(2) Port Business Review
In 2018, the Company’s ports handled a total container throughput of 109.73 million TEUs, up by 6.6%
year-on-year, among which the ports in Mainland China contributed container throughput of 81.39 million TEUs,
indicating an increase of 5.5% year-on-year, which was mainly driven by steady recovery of the Mainland China’
s economy and improvement of import and export trade. The Company’s operations in Hong Kong and Taiwan
contributed an aggregate container throughput of 7.67 million TEUs, representing a growth of 2.5% as compared
with the same period last year. Benefited from the rapid growth of the ports operation of CICT in Sri Lanka, LCT
in Togo and Kumport in Turkey, a total container throughput handled by the Company’s overseas ports grew by
12.9% year-on-year to 20.66 million TEUs. Bulk cargo volume handled by the Group’s ports increased by 1.5%
year-on-year to 504 million tonnes, of which the Group’s ports in Mainland China handled a total bulk cargo
volume of 530 million tonnes, representing an increase of 1.6% year-on-year.
Pearl River Delta region
In the Pearl River Delta region, the Group’s terminals in West Shenzhen Port Zone handled a container
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
throughput of 11.35 million TEUs, up by 1.5% year-on-year. Chu Kong River Trade Terminal Co., Ltd. handled a
total container throughput of 1.17 million TEUs, down by 13.3% year-on-year. Bulk cargo volume handled by the
West Shenzhen Port Zone amounted to 18.03 million tonnes, down by 17.3% year-on-year, mainly due to the
decrease in business volume as a result of the upgrade and renovation project of Haixing Port. With further release
of production capacity, Dongguan Machong Terminal handled bulk cargo volume of 13.23 million tonnes during
the period, representing an increase of 3.4% year-on-year.
Yangtze River Delta region
Shanghai International Port (Group) Co., Ltd. (“SIPG”) handled a container throughput of 42.01 million TEUs,
up by 4.4% year-on-year, which was mainly driven by the increase in number of shipping routes due to
reorganisation of shipping companies’ alliances, and the release of production capacity from the commencement
of operation of phase IV of SIPG’s fully automated port in Yangshan since December 2017. Bulk cargo volume
handled during the year decreased by 8.3% year-on-year to 150 million tonnes, mainly attributed to the decrease
in coal unloaded amount after adjustments made against the structure of bulk cargo source by SIPG. Ningbo
Daxie China Merchants International Terminals Co., Ltd. handled a container throughput of 3.16 million TEUs,
representing an increase of 5.1% year-on-year, which was mainly benefited from the adjustment of certain
shipping routes.
Bohai Rim region
Dalian Port (PDA) Company Limited handled a container throughput of 11.11 million TEUs and bulk cargo
volume of 135 million tonnes, representing an increase of 3.3% and 4.3% year-on-year respectively. Qingdao
Qianwan United Container Terminal Co., Ltd. handled a container throughput of 6.93 million TEUs, representing
an increase of 11.1% year-on-year. Qingdao Qianwan West Port United Terminal Co., Ltd. handled bulk cargo
volume of 15.54 million tonnes, representing an increase of 18.4% year-on-year. Qingdao Port Dongjiakou Ore
Terminal Co., Ltd. handled bulk cargo volume of 57.36 million tonnes, indicating an increase of 3.6%
year-on-year. Laizhou Harbour Affairs (莱州港务) handled bulk cargo volume of 22.75 million TEUs,
representing an increase of 4.7% year-on-year. Tianjin Five Continents International Container Terminals Co., Ltd.
handled a total container throughput of 2.72 million TEUs, representing an increase of 3.4% year-on-year.
South-East region of Mainland China
Zhangzhou China Merchants Port Co., Ltd. (“ZCMP”), located in Xiamen Bay Economic Zone, handled a
container throughput of 0.457 million TEUs, increased by 13.9% year-on-year, which was mainly benefited from
the increase in domestic shipping routes. With the recovery of the production capacity of wood processing and
iron ore fines industries in the hinterland of ZCMP, bulk cargo volume handled by ZCMP amounted to 14.32
million tonnes, up by 37.4% year-on-year. Shantou China Merchants Port Group Co., Ltd., which was acquired in
August 2017, handled a container throughput of 1.29 million TEUs and bulk cargo volume of 9.23 million tonnes.
South-West region of Mainland China
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
Zhanjiang Port (Group) Co., Ltd. handled a container throughput of 0.98 million TEUs, up by 9.7% year-on-year;
and a bulk cargo volume of 91.87 million tonnes, up by 1.8% year-on-year.
Hong Kong and Taiwan
The total container throughput handled by ports in Hong Kong dropped by 5.7% year-on-year, of which the
container throughput handled by the ports in Kwai Tsing area decreased by 4.7% year-on-year. Modern Terminals
Limited and China Merchants Container Services Limited delivered an aggregate container throughput of 5.93
million TEUs, up by 2.5% year-on-year, which outperformed the overall market of Hong Kong. Kao Ming
Container Terminal Corporation in Kaohsiung handled a total container throughput of 1.75 million TEUs,
representing an increase of 2.8% year-on-year.
Overseas operation
In 2018, a total container throughput handled by the Company’s overseas operations increased by 12.9%
year-on-year to 20.66 million TEUs, among which container throughput handled by CICT in Sri Lanka rose by
12.0% year-on-year to 2.68 million TEUs. Container throughput handled by LCT in Togo increased by 18.3%
year-on-year to 1.05 million TEUs. Container throughput handled by Tin-Can Island Container Terminal Limited
(referred to as TICT) in Nigeria was 0.48 million TEUs, representing an increase of 2.4% year-on-year. Container
throughput handled by Port de Djibouti S.A. (referred to as PDSA) in Djibouti amounted to 0.86 million TEUs,
down by 7.5% year-on-year, mainly attributed to the decrease in transshipment volume to Ethiopia. Terminal Link
SAS, which acquired the port of Thessaloniki in Greece at the beginning of the year, handled container throughput
of 13.64 million TEUs, representing an increase of 8.6% year-on year. Container throughput handled by Kumport
in Turkey increased by 18.3% year-on-year to 1.26 million TEUs. In February 2018, the acquisition of TCP in
Brazil was officially completed. TCP handled a container throughput of 0.69 million TEUs from March to
December.
(3) Implementation of business plan during the reporting period
During the reporting period, adhering to the working principles of “farsighted and down-to-earth” and
“establishing integrated systems and building core competitiveness”, the Company continued to maintain its
strategic strength and remained committed to the strategic focus of domestic and overseas development and
innovation and achieved major breakthroughs in five aspects, namely the development of homebase port, port
consolidation, overseas expansion, comprehensive development and business innovation. Over the past year, the
Company actively implemented its key tasks and maintained a steady growth in the core business and operating
results of the Company’s ports.
Regarding the development of its homebase ports, Tonggu Channel project in West Shenzhen Port Zone was
completed which enabled 200,000-tonnes mega vessels to call. Moreover, the renovation project of Haixing Port
progressed as scheduled while the construction proposal of “Smart Port” has been proved and already entered into
the implementation stage. In accordance with the concept of “strong synergy for high throughput”, the Group has
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
facilitated the cooperation between West Shenzhen Port Zone and river terminals in the Pearl River Delta and
achieved preliminary results.
In terms of port consolidation, the Company has established a strategic layout with a focus on “developing in
Guangdong-Hong Kong-Macao Bay Area, connecting regions along Belt and Road Initiatives with a broad global
network coverage” through strategic reconstruction, which has become the platform for managing the CMG’s
port business and capital operation. In Bohai Rim, the entrusted management arrangement of Liaoning Port Group
was completed.
As for overseas expansion, by seizing the opportunities arising from the major initiative of “Belt and Road”
and the transfer of international production, the Company actively grasped the investment opportunities in ports,
logistics and related infrastructure. The Company completed the acquisitions of TCP Terminal in Brazil, South
America and Port of Newcastle in Australia, Oceania in 2018, realising its full coverage in six continents and
further optimising its global port network.
In terms of comprehensive development, the Company actively explored and promoted the “Port-Park-City”
comprehensive development model and achieved milestone progress. Djibouti International Free Trade Zone was
officially opened in July 2018 and received good response. The comprehensive development project of
Hambantota Port in Sri Lanka has completed the initial overall conceptual planning and has been actively
developing the wheeled and bulk cargo business, demonstrating a sound business development trend.
With regard to innovative development, the Group actively pushed forward the “digitalised strategy” through
the philosophy of “bringing influence through technology innovation, facilitating expansion by business
innovation, enhancing quality and efficiency by integration innovation, and planning future by mechanism
innovation” in exploring the construction of the port ecosystem. In 2018, the Company completed the E-Port
project, RTG Remote Control project and Pearl River Delta (“PRD”) NETWORK project in West Shenzhen
Port Zone with the utilisation of digital port technology, automated terminal technology, artificial intelligence
application and big data analysis application. In terms of integrated cooperation model of industry with elements
of finance, the Company planned for the establishment of the China Port Innovation Investment Fund (中国港口
创新投资基金) which aimed to coordinate with the domestic influential port groups, innovate integrated
cooperation model of industry with elements of finance, and explore new technologies, models and mechanisms
for the port ecosystem, thereby achieving collaboration and resource matching between various port groups and
the invested industries.
(4) Outlook of the Company’s future development
Outlook and trends of the industry
Looking forward to 2019, after the strong recovery in the last two years, the global economy will face the
risk of slower growth. Trade protectionism will lead to more friction in the circulation of key elements and
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
geopolitical issues will continue to dampen global recovery. With the weakening marginal utility of the
stimulation policies, coupled with the effect of continuous interest rate hike, the United States will be facing
increased debt and financial pressure; while the European economies will continue to recover at a slow pace
with the prevailing uncertainties associated with political risks. Meanwhile, as affected by capital outflow,
currency depreciation and geopolitical issues, the emerging and developing economies demonstrated
diverging growth trends. According to IMF, it is expected that the global economy will grow at a lower rate
of 3.5% in 2019, down 0.2 percentage point as compared to that of 2018, among which, developed
economies are expected to grow by 2.0%, down 0.3 percentage point as compared to that of 2018; emerging
and developing economies will grow by 4.5%, down 0.1 percentage point as compared to that of 2018, and
the total global trade volume (including goods and services) will grow by 4.0%, flat with 2018.
China’s economy will be exposed to a more complicated condition in 2019 and shift from the phase of rapid
growth to quality growth. Infrastructure investment will gradually stabilise under more vigorous fiscal
expansion whilst income tax reform will help to stabilise consumption. The constant promulgation of
supportive policies for private enterprises will restore the confidence of the enterprises. Fiscal and monetary
policies aiming to stabilise overall demand will be more relaxed, and a more moderate and flexible approach
will be adopted in addressing complicated international issues such as Sino-US trade friction. All of the
above will be conducive to economic and trade growth. According to the IMF, China’ economy is projected
to grow by 6.2% in 2019, down 0.4 percentage point over 2018.
Affected by the trade investment policy of “reverse globalization” and the adjustment of macroeconomic
policies such as interest rate hike and tax reduction of developed countries, the risk of declining cyclical
recovery momentum of the global economy will increase. In 2019, the global container transportation market
will be under recovery and adjustment with the pressure of overcapacity. Under the influence of the Sino-US
trade friction, the centralized export in 2018 by certain cargo owners of Trans-Pacific shipping routes will
have a certain impact on their seaborne volume in 2019; while the shipping price of Asia-Europe shipping
routes is under pressure as affected by the economic slowdown in Europe. However, the industrial transfer
will bring more rooms for the development of shipping routes in Southeast Asia. Meanwhile, under the
influence of trade friction and industrial transfer, the port investment of emerging economies will be facing
intensified competition. The port price of developed countries continued to rise, creating great pressure for
the acquisition and expansion strategy of port operators.
The current policies in China encouraging imports and acceleration of consumption upgrade will drive the
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
growth of domestic import. Through measures such as organizing Import Expo, the Chinese government has
been vigorously driving consumption. In the future, the government will focus on both export and import in
China and the consumption import market will certainly provide great support for the port operation in China.
The continued implementation of Guangdong-Hong Kong-Macao Greater Bay Area and free-trade port
policy is expected to promote port development. With enhancing trading activities in the region, there will be
opportunities for the development of regional shipping hubs. The integration of domestic regional ports has
also brought opportunities to tap into major coastal cities and realise comprehensive development. Under the
new development trend of domestic and overseas economy and trade as well as ports and the shipping
industry, the Company will be playing an increasingly important role as a major player among global
comprehensive port service providers.
Development strategy of the Company
The Company is striving to become a world’ leading comprehensive port service provider and will firmly adhere
to the strategic principle of being “farsighted, down-to-earth, technology-driven and flexible” and the goal of
quality development to accelerate the technology-powered innovation, thereby realizing a scientific global layout
with balanced development, providing first-class professional solutions and seeking more returns for shareholders,
which will in turn support the development of local economy and industries and promote positive development of
the port industry.
Firstly, in respect of domestic strategies, the Company will, by seizing the opportunity arising from the
supply-side reform and based on “regional consolidation and enhancement of synergy” seek for opportunities for
consolidation and cooperation on an ongoing basis across the five main coastal regions with a view to further
expanding and improving the ports network layout within China. The Group will lead a new direction for the
consolidation of regional ports with a key focus on constantly improving the quality of port development with its
best efforts. Secondly, in respect of overseas strategies, the Company will continue to capitalize on the
opportunities arising from the “Belt and Road” initiative promoted by China and the international industrial
transfers, at the same time adapting to the trend of deploying mega-vessels and forming shipping alliances.
Emphasis will be placed on the development of global major hub ports and gateway ports as well as areas with
high market potential, fast-growing economy and promising development prospect. The Company will grasp
opportunities in port, logistics and related infrastructures investment for the on-going enhancement of its global
port network.
Thirdly, in respect of innovation strategies, the Company will adhere to “technology-driven and flexible” while
supporting future port development by stepping up investment in innovation and holding the technology high
ground. By means of technological innovation and innovative management, it will significantly enhance the
efficiency and effectiveness of port operation and become a leading enterprise in the automation transformation of
traditional ports. It will also enrich the comprehensive port services through business model innovation.
Business plans for 2019
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
In 2019, under the strategic principle of being “farsighted, down-to-earth, technology-driven and flexible”, the
Company will strengthen synergic cooperation externally and accelerate integrated development internally, make
efforts to enhance various capabilities, improve risk prevention and control, establish quality development models
and be committed to the vision of being a “global-leading comprehensive port service provider”.
Regarding the development of homebase port, the Company will promote the West Shenzhen Port Zone as a
world-class leading port by pushing forward the dredging project of West Shenzhen Port Zone and the completion
and acceptance of the Tonggu Channel project as soon as possible and thus offering protection to the mega vessels
to call at West Shenzhen Port Zone. Meanwhile, the Company will strengthen the construction of smart ports,
facilitate the construction of “PRD NETWORK” platform, expand the network scope and data docking depth of
the Pearl River Delta, enhance the transformation of the smart safety monitoring and on-shore smart container
identification system of CCT Port Zone by the use of various technologies such as LBS system, Internet of Things,
big data, etc. and therefore contributing to the construction of smart ports. In addition, accelerating the promotion
of innovative applications, implementation of innovative projects including “system for safety protection and
operation support in RTGs” and “RTG Remote Control” will improve operational efficiency, reduce operating
costs, strengthen trade facilitation and improve the overall competitiveness of the homebase port. In terms of
overseas homebase port, the Company will leverage the synergic advantages of CICT and Hambantota port to
create a leading regional port and international shipping centre in South Asia.
Regarding overseas expansion, the Company will further improve its global ports network, focus on gateway ports
and conduct in-depth research regarding its overseas layout. Also, the Company will identify priorities in strict
compliance with assessment dimensions and principles for overseas ports projects. The Group will conduct studies
on its overseas network along the “East-West route, South-North route, regions along the Belt and Road
Initiatives”. Furthermore, the Company will continue to put more efforts in the study of global regional market to
establish and improve the regional market development and research database for the East Africa, West Africa,
South Asia, Europe, Latin America and Southeast Asia.
In terms of comprehensive development, leveraging the opportunities brought by the shift towards “China+”
industry, the Group will step up its efforts in promoting the “Port-Park-City” business model, and actively
push forward the construction and development of the Djibouti Free Trade Zone for the comprehensive
development project in Djibouti. For the comprehensive development project in Togo, the Group will continue to
proactively promote the relevant comprehensive development cooperation projects; while for the Hambantota Port
project, the Group will facilitate the preliminary work in relation to introduction of investment and capital based
on the improvement of the park development plan. Capitalizing development opportunities arising from of the
Guangdong-Hong Kong-Macao Greater Bay Area, the Company will actively make progress on its land
preparatory works in the Qianhai-Shekou Free Trade Zone by participating in the overall development thereof.
Regarding operation management, the Company will continuously optimise internal procedures and mechanisms
to promote management reform and process reengineering. The Company will focus its efforts on enhancing the
level of refined operation and management of terminals for which it is a controlling shareholder, benchmarking its
terminal management, reducing cost and improving efficiency, and generating income by saving costs so as to
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
establish a governance structure of globalised operation and management headquarter, optimise overall
management system and enable operating mechanism to be in line with project operation. The Company will also
enhance its investment management and amend and improve relevant systems and procedures.
In terms of M&A integration, the Company will actively incorporate national strategies in its operation, with a
focus on the policy opportunities arising from the “Belt and Road Initiative”, coordinated development of
Beijing, Tianjin and Hebei Province, the Yangtze River Economic Belt, the Guangdong-Hong Kong-Macao
Greater Bay Area, the opening-up of Hainan trade zone, the revitalisation of Northeast China and the integrated
development of the Yangtze River Delta Zone. The Company will also form a set of effective operational
procedures to develop world-class M&A integration capability. Moreover, when the Company manages the assets
of Liaoning Port, it will explore the potential for integration, focus on its core business and implement the
integration of operational models through optimising the port zone layout, thereby creating business synergies.
Regarding innovative development, the Company will continue to enhance informatisation, upgrade and promote
its core IT products, i.e. “TOS” series. Taking “E-Port” as a pivot, the Company will set up the
establishment of top-tier port platform for providing excellent customer services. On the one hand, the Company
will attach further importance to the unique role and fundamental position of technology-driven and
innovation-oriented development. Also, the Company will create a top-tier port innovation ecosystem. Smart
upgrade of controlling terminals of the Company will be gradually achieved through technological innovation.
The Company will learn from the experience of implementing “RTG Remote Control” project in an in-depth
manner to formulate a proposal for “RTG Remote Control” with its own features so as to support the
transformation of Haixing Harbour and smart upgrade of various terminals in the future.
Capital needs and use plan
The total investment on fixed assets of the Company in 2019 is planned to reach RMB8,340,180,000, of which:
RMB4,752,850,000 is for the investment on warehousing and port projects; RMB2,221,100,000 is for that on
mechanical equipment and vehicle projects; RMB565,080,000 is for that on information projects; and
RMB801,150,000 is for that on administrative, office and miscellaneous projects. The required funds of the above
capital expenditure are mainly from the cash flow obtained from the Company’s operation and third-party
financings.
Possible risks and counter measures
External risks
The external risks mainly come from the combined impact of international political environment and
consolidation of domestic port groups. As for international political risks, the rise of populism around the globe
has led to challenges in the globalization trend. The change in geopolitical and economy trade landscape, as
highlighted by Sino-US trade friction, has caused changes in global trade structure and resulted in certain impacts
on global economy trade and port shipping sector. Shipping routes in various regions across the globe may be
affected and changed accordingly, causing adverse impacts on containers and bulk cargo businesses of the
Company. As for consolidation of domestic port groups, with an ever-deepening consolidation of various regions
16
China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
in China, the port competition landscape will change correspondingly, causing uncertainty to the business and
operation earnings of the Company.
By enhancing the build-up of risk identification, warning and mitigation ability, the Company has prevented,
controlled and reduced external risks. The Company has continued to pay attention to changes in external policies
and market environment specific to international political environment risk, especially Sino-US trade friction. On
one hand, the Company can improve risk warning and monitoring measures and ensure proper work on customer
credit status so as to reduce the risk of accounts receivable. On the other hand, the Company can notice the
changes in the trade market structure and flow of resources, formulate and adjust strategies for business
development in time so as to enhance collaboration and close connection between ports at home and abroad,
improve service quality and related services, and stabilize import and export business and customer base.
Internal risks
The internal risks mainly come from the risks of shortage of outsourced labour, increased cost and legal
compliance of overseas investment projects. In the context of economic transformation and upgrade in Shenzhen,
wharf operation as a traditional industry faced significant labour shortage for the outsourced business due to the
current working conditions and remuneration packages. Remarkable trends such as staff turnover and aging staff
will affect production efficiency and posed safety risks. When the Company expands its overseas business, the
requirement on compliance with legal policies in invested countries will pose the risk of uncertainty on the
investment and operation of the Company.
The Company has proactively studied the outsourced staffing policy and formulated corresponding responsive
strategies to diminish the impacts of outsourced staffing risk on the business of the Company, including enhancing
the working environment of outsourced staff and improving their remuneration packages by increasing labor
productivity, accelerating technological upgrade and innovation of techniques to raise the level of mechanization,
reduce manual labor input and lower the use of manpower. Regarding the legal compliance risk of overseas
investment projects, the Company will step up its efforts in establishing and enforcing compliance management
system and ensure proper work on management and control throughout the process, i.e. before, during, and after
overseas investment project investment and operation, so as to strictly prevent legal compliance risks.
2. Significant Change to Principal Activities in the Reporting Period
□ Yes √ No
3. Product Category Contributing over 10% of Principal Business Revenue or Profit
Unit: RMB
YoY change in YoY change in
Gross profit YoY change in
Operating revenue Cost of sales operating revenue gross profit
margin cost of sales (%)
(%) margin (%)
By operating division
Port operations 9,184,527,309.09 5,303,286,893.31 42.26% 29.27% 23.38% 5.81%
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
By operating segment
Mainland
China, Hong
6,635,924,788.34 4,216,939,216.81 36.45% 9.93% 6.56% 2.90%
Kong and
Taiwan
Other countries
3,067,469,834.24 1,522,302,179.06 50.37% 103.37% 102.15% 0.30%
and regions
4. Business Seasonality that Calls for Special Attention
□ Yes √ No
5. Significant YoY Changes in Operating Revenue, Cost of Sales and Net Profit Attributable to the Listed
Company’s Ordinary Shareholders or Their Compositions
□ Applicable √ Not applicable
6. Possibility of Listing Suspension or Termination
□ Applicable √ Not applicable
7. Matters Related to Financial Reporting
(1) YoY Changes to Accounting Policies, Accounting Estimates or Measurement Methods
The changes in accounting policies of the Company are as follows: on 31 March 2017, the Ministry of Finance
issued Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial
Instruments (hereinafter referred to as “Revised Standards No.22”), Accounting Standards for Business
Enterprises No.23-Transfer of Financial Assets (hereinafter referred to as “Revised Standards No.23”),
Accounting Standards for Business Enterprises No.24-Hedge Accounting (hereinafter referred to as “Revised
Standards No.24”); on 2 May 2017, the Ministry of Finance issued Accounting Standards for Business Enterprises
No.37-Presentation of Financial Instruments (hereinafter referred to as “Revised Standards No.37”); on 5 July
2017, the Ministry of Finance issued Accounting Standards for Business Enterprises No.14-Income (hereinafter
referred to as “Revised Standards No.14”). The Company starts to implement the Revised Standards No.22, No.23,
No.24, No.37 and No.14 in accordance with requirements stipulated in documents of the Ministry of Finance
since 1 January 2018. For more details, please refer to the Announcement on Changes in Accounting Policies
(announcement No.: 2018-025) disclosed on cninfo.com.cn by the Company on 7 March 2018.
On 27 November 2018, the Company held the 8th Extraordinary Meeting of the 9th Directors of the Board in 2018
and the 5th Extraordinary Meeting of the 9th Supervisory Committee in 2018, on which the Proposal on Changes
in Accounting Estimate of Fixed Assets was reviewed and approved. In line with the Accounting Standards for
Business Enterprises No.4-Fixed Assets and relevant regulations of the Company, the Company rechecked the
estimated useful life and expected net residual value of fixed assets based on the current performance and service
condition of fixed assets and decided to adjust the depreciation life of partial fixed assets and net residual value of
total fixed assets so as to make it more reasonable and reflect the Company’s financial condition and operating
results more objectively and fairly. For more details, please refer to the Announcement on Changes in Accounting
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China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
Estimate of Fixed Assets (announcement No.: 2018-104) disclosed on cninfo.com.cn by the Company on 28
November 2018.
For further information, please refer to (III) Changes in Main Accounting Policies and Estimates in Part XI
Financial Statements for details.
(2) Retrospective Restatements due to Correction of Material Accounting Errors in the Reporting Period
No such cases.
(3) YoY Changes to the Scope of Consolidated Financial Statements
During the year under review, the Company acquired a 51% interest in China Merchants Port (Zhoushan) RoRo
Logistics Co., Ltd. (“Zhoushan RoRo”). Zhoushan RoRo changed its directors, supervisors and senior
management with the industrial and commercial administration on 29 August 2018 and officially became a
majority-owned subsidiary of the Company. From that day on, the Company includes Zhoushan RoRo into the
consolidated financial statements. The above-mentioned acquisition fits the definition of an assets acquisition, and
does not constitute business or a business combination. Thus, it is recognized as a change to the consolidation
scope caused by other reasons.
The Company and China Merchants Investment Development Company Limited (hereinafter referred to as
“CMID”) signed the Agreement on Asset Acquisition through the Issue of Shares on 19 June 2018, which was
approved by China Securities Regulatory Commission through the Reply on the Approval of the Issue of Shares by
Shenzhen Chiwan Wharf Holdings Limited to China Merchants Investment Development Company Limited for
Asset Acquisition and Raising of Supporting Funds (ZJXK [2018] No. 1750). The Company issued shares to
CMID to acquire 1,313,541,560 ordinary shares (hereinafter referred to as “the target assets”) of China Merchants
Port Holdings Company Limited (hereinafter referred to as CMPort Holdings) held by CMID. According to the
transaction bills affixed with the stamp duty of Hong Kong dated 15 November 2018 and the Daily Settlement
Book of Chiwan Wharf’s stock account produced on 16 November 2018 by China Merchants Securities (HK) Co.,
Ltd., the stock agent in Hong Kong, the 1,313,541,560 CMPort Holdings ordinary shares have been registered
under the name of the Company, marking that the procedures for the registration of the ownership transfer in
respect of the target assets has been completed. As at 25 December 2018, the procedures for the registration of the
shares issued by the Company to the counterparty CMID had been completed in CSDCC Shenzhen. Thus, the
Company has controlled and consolidated CMPort Holdings. For more details, please refer to the Announcement
of Shenzhen Chiwan Wharf Holdings Limited on the Issue of Shares to Acquire Assets and Raise Supporting
Funds and the Attainment of the Approval from CSRC for Related-party Transactions (Announcement No.
2018-094), and the Report of China Merchants Port Group Co., Ltd. on the Issue of Shares to Acquire Assets and
Raise Supporting Funds and the Implementation of Related-party Transactions and the Listing of New Shares
published on CNINFO (http://www.cninfo.com.cn) on 1 November 2018 and 24 December 2018 respectively.
On 25 December 2018, the Company completed the issue of shares to the counterparty CMID and achieved the
control over CMPort Holdings in form and nature. In accordance with the related provisions in the Accounting
19
China Merchants Port Group Co., Ltd. Annual Report 2018(Summry)
Standards for Business Enterprises No. 33 - Consolidated Financial Statements, the Company started to
consolidate the financial statements of CMPort Holdings from December 2018, and adjusted the beginning and
last year data in the comparative financial statements according to the rules governing business combinations
under common control.
For and on behalf of the Board
Bai Jingtao
Legal representative of
China Merchants Port Group Co.,Ltd
Dated 30 March 2019
20
