Core Viewpoint - Shenzhen International reported a decline in its 2025 H1 performance, with revenue of HKD 6.67 billion, up 0.9% year-on-year, and a net profit of HKD 490 million, down 24.9% year-on-year, primarily due to the absence of tax income from REITs compared to the previous year [1][2]. Financial Performance - The company's 2025 H1 revenue was HKD 6.67 billion, reflecting a slight increase of 0.9% year-on-year [1]. - The net profit attributable to shareholders was HKD 490 million, showing a significant decline of 24.9% year-on-year [1]. - The logistics park business generated revenue of HKD 785 million in 2025 H1, an increase of 5.4% year-on-year, but the profit attributable to shareholders dropped by 90% to HKD 56 million [2]. - The company’s toll road and environmental protection business revenue was HKD 4.22 billion, up 4% year-on-year, with attributable profit of approximately HKD 484 million, up 12% [3]. Business Development - The logistics park transformation and upgrade projects are expected to enhance profit elasticity, with projected after-tax income exceeding HKD 156.58 billion from the South China logistics park transformation [2]. - As of June 2025, the company has established a presence in 41 cities, managing 53 logistics port projects with a total operational area of approximately 6.71 million square meters, achieving a comprehensive rental rate of about 87% in mature logistics parks [2]. Future Outlook - The company maintains its profit forecast for 2025-2027, estimating net profits attributable to shareholders at HKD 3.08 billion, HKD 3.43 billion, and HKD 3.93 billion respectively, with corresponding dividend yields of 8.3%, 9.3%, and 10.6% based on a 50% payout ratio [3]. - The company is expected to continue benefiting from land appreciation and the advancement of logistics port asset securitization, which may enhance capital efficiency and sustain dividends [3].

Investment Rating - The report maintains a "Buy" rating for Shenzhen International [2][19] Core Views - The company reported a half-year revenue of HKD 6.67 billion, a year-on-year increase of 0.9%, and a net profit attributable to shareholders of HKD 490 million, a decrease of 24.9% year-on-year. The decline in profit is primarily due to the absence of tax income from the REITs in the first half of 2025, which was recorded in the first half of 2024 [9] - The logistics park transformation project is expected to provide significant profit elasticity, with estimated after-tax income contributions exceeding HKD 156.58 billion over the project's lifespan [9] - The company has optimized its debt structure, reducing financial costs, and continues to focus on enhancing operational efficiency and risk management [9] Financial Data and Profit Forecast - Revenue projections for Shenzhen International are as follows: - 2023: HKD 20,524 million - 2024: HKD 15,571 million - 2025E: HKD 16,007 million - 2026E: HKD 16,488 million - 2027E: HKD 17,159 million - Net profit attributable to shareholders is projected to grow from HKD 1,902 million in 2023 to HKD 3,925 million by 2027, reflecting a compound annual growth rate [6][10] - The earnings per share (EPS) is expected to increase from HKD 0.80 in 2023 to HKD 1.60 in 2027, indicating a positive trend in profitability [6][10]

Core Insights - The report highlights the updated monthly interest rate timing model, which shows improved predictive accuracy with a success rate of 74% for the recent two years [12][14] - The company Atour (ATAT.O) has raised its full-year retail revenue guidance, with Q2 revenue growing by 37.4% year-on-year to 2.47 billion yuan, exceeding expectations [15][17] - Shenzhen International (00152.HK) reported a revenue of 6.67 billion yuan, a year-on-year increase of 0.9%, with a focus on logistics park transformation projects [18][16] Group 1: Interest Rate Timing Strategy - The updated model incorporates richer factor indicators and adjusts weightings for different types of indicators, enhancing predictive capabilities [14] - Three strategy applications have been designed: basic timing strategy, timing & treasury futures strategy, and timing & leverage strategy, all outperforming longer-duration benchmarks [14] - The timing & leverage strategy achieved a maximum annualized excess return of 128 basis points [14] Group 2: Atour (ATAT.O) Performance - Atour's Q2 performance exceeded expectations, with a net profit increase of 39.8% year-on-year to 425 million yuan [15][17] - The company opened 118 new hotels in Q2, maintaining its target of 500 new openings for the year [15][17] - Retail business GMV reached 1.144 billion yuan in Q2, a year-on-year growth of 84.6%, with online sales accounting for over 90% [15][17] Group 3: Shenzhen International (00152.HK) Insights - The company’s logistics park transformation and asset securitization strategies are expected to enhance earnings resilience [18][16] - For 2025-2027, net profit forecasts are 3.081 billion, 3.430 billion, and 3.925 billion HKD, with a dividend yield projected at 8.3%, 9.3%, and 10.6% respectively [18][16] - The logistics park business reported a revenue of 785 million HKD in H1 2025, a year-on-year increase of 5.4% [18][16] Group 4: Steel Industry Performance - Baosteel (600019) reported steady growth with high dividend maintenance, while Hualing Steel (000932) saw a significant increase in high-end product sales [20][24] - The steel industry is experiencing a shift towards high-end products, with companies like Zhongxin Special Steel (000708) maintaining stable performance [26] - The overall steel market is expected to benefit from reduced raw material costs and improved product structures, leading to enhanced profitability [24][26]

Core Viewpoint - Shenzhen International's stock dropped over 7% following the release of its interim results, reflecting market concerns over its profitability and dividend sustainability [1] Financial Performance - The company reported a revenue of HKD 6.67 billion for the first half of the year, remaining flat compared to the same period last year [1] - Shareholder profit decreased by 25% year-on-year to approximately HKD 490 million, primarily due to the absence of tax income from two logistics port projects that contributed HKD 587 million in the previous year [1] - The company did not declare an interim dividend [1] Market Outlook - Shenwan Hongyuan previously indicated that the transformation and upgrade of logistics parks in South China will continue to enhance performance over the next 6-8 years [1] - The successful securitization of logistics port assets is expected to improve capital recovery, supporting stable growth in company performance [1] - Concerns over the sustainability of dividends have led to a downward adjustment in the company's valuation, but with stable dividends, land appreciation, and successful asset securitization, there is potential for valuation recovery to historical averages [1]

Core Viewpoint - Shenzhen International's stock dropped over 7% following the release of its interim results, reflecting concerns over declining profits and lack of interim dividends [1] Financial Performance - The company reported a revenue of HKD 6.67 billion for the first half of the year, remaining flat compared to the same period last year [1] - Shareholder profit decreased by 25% year-on-year to approximately HKD 490 million, primarily due to the absence of tax income from two logistics port projects that contributed HKD 587 million in the previous year [1] - The company did not declare an interim dividend for this period [1] Future Outlook - Shenwan Hongyuan previously indicated that the transformation and upgrading of logistics parks in South China will continue to drive performance over the next 6-8 years, alongside asset securitization of logistics ports to enhance capital recovery [1] - The market's previous valuation adjustments were mainly due to concerns over the sustainability of dividends; however, with stable dividends, land appreciation, and successful asset securitization, the company is expected to maintain dividends and potentially restore valuations to historical averages [1]

Investment Rating - The report initiates coverage with a "Buy" rating for Shenzhen International [1][6] Core Views - Shenzhen International is a state-owned enterprise with high-quality resources, focusing on logistics, toll roads, ports, and environmental protection, aiming to become a leading urban infrastructure developer and operator in China [5][17] - The company has developed a "big closed-loop" business model for logistics park transformation and a "small closed-loop" model for asset securitization, enhancing its earnings resilience [5][6] - The transformation of the South China logistics park is expected to contribute over HKD 15.658 billion in after-tax revenue [5] - The company maintains a stable dividend policy with a payout ratio of around 50% of net profit, making it an attractive high-dividend stock [5][37] Financial Data and Profit Forecast - Revenue projections for Shenzhen International are as follows: - 2023: HKD 20.524 billion - 2024: HKD 15.571 billion - 2025E: HKD 16.007 billion - 2026E: HKD 16.488 billion - 2027E: HKD 17.159 billion - Net profit attributable to shareholders is forecasted to be: - 2023: HKD 1.902 billion - 2024: HKD 2.872 billion - 2025E: HKD 3.081 billion - 2026E: HKD 3.430 billion - 2027E: HKD 3.925 billion [4][6] Business Model and Strategy - The company operates in four main sectors: toll roads and environmental protection, logistics, port services, and other investments [5][28] - The "big closed-loop" model focuses on land value appreciation through transformation and redevelopment, while the "small closed-loop" model involves asset securitization through public REITs or private funds [5][28] - The logistics and port business is the core of the company, with toll roads and environmental protection providing a stable revenue base [5][28] Market Position and Competitive Advantage - Shenzhen International is the only state-owned enterprise in Shenzhen that is publicly listed and focuses on modern logistics, toll roads, ports, and environmental protection [5][17] - The company has a strong presence in key economic regions such as the Guangdong-Hong Kong-Macao Greater Bay Area, Yangtze River Delta, and Beijing-Tianjin-Hebei Economic Zone [5][17] - The company has a competitive edge due to its strategic location and experience in land development and asset management [5][9] Dividend Policy - The company has maintained a consistent dividend payout ratio of around 50% since 2017, with total dividends of HKD 15.593 billion from 2015 to 2024 [5][37] - Future dividends are expected to remain stable, supported by the logistics park transformation and asset securitization initiatives [5][37]