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HSBC downgrades China Merchants Port to "hold"
 HSBC Global Research cut its target price for
China Merchants Port (00144) to HK$20 from HK$23, and downgraded its rating to "hold" from
"buy".
  The research house is cautious about the aggressive inorganic expansion of China's port
operators as most of CM Port's recent investments have been either expensive or in low 
yielding assets. CM Port has announced investments of over HK$27bn (US$3.5bn) since the
end of 2016.
  HSBC downgrades the stock because it remains cautious near term given pricing pressure 
in its China portfolio and ROE dilution from recent investments. The lower target price
was driven by lower earnings estimates and tariff assumptions offset to some extent by the
inclusion of Shantou Port Group at investment cost.
  HSBC lowers its recurring profit estimates for CM Port by 3-6% in 2017-19e. Its revised
estimates forecast flat earnings growth in 2017-19e, mainly due to subdued tariff
expectations.

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