Intrinsic Value Rizhao Port Jurong Co., Ltd. (6117.HK)

• Previous Close: HK$0.70
• Intrinsic Value: HK$0.77
• Upside potential: +10%

Stock Valuation Context

Business Model And Market Position

Rizhao Port Jurong Co., Ltd. operates as a specialized port service provider in Rizhao, China, focusing on bulk cargo handling. Its core revenue model is derived from stevedoring services, berth leasing, port management, storage, and logistics agency operations. The company primarily handles agricultural commodities, including soybeans, woodchips, dried tapioca, sorghum, maize, and wheat, positioning itself as a critical node in the regional agricultural supply chain. Operating within the industrials sector's marine shipping segment, it serves as a vital logistics hub for import and export activities in Shandong Province. As a subsidiary of Rizhao Port Co., Ltd., it benefits from integrated port infrastructure and established customer relationships, though it operates in a competitive landscape with other regional ports. Its market position is strengthened by its specialization in specific bulk commodities, providing operational expertise and efficient turnaround times that appeal to traders and agricultural producers reliant on consistent and cost-effective port services.

Revenue Profitability And Efficiency

The company reported revenue of HKD 847 million with a net income of HKD 206 million, indicating a healthy net profit margin of approximately 24.3%. This strong profitability is supported by efficient port operations and effective cost management, translating robust revenue into significant bottom-line results.

Earnings Power And Capital Efficiency

Diluted EPS stood at HKD 0.12, reflecting the company's earnings power relative to its equity base. Operating cash flow was strong at HKD 304 million, significantly exceeding net income, indicating high-quality earnings and efficient cash conversion from core operations.

Balance Sheet And Financial Health

The balance sheet shows a conservative financial structure with total debt of HKD 333 million against cash and equivalents of HKD 408 million, resulting in a net cash position. This low leverage and high liquidity provide substantial financial flexibility and resilience against operational or economic downturns.

Growth Trends And Dividend Policy

Capital expenditures of HKD -404 million indicate significant investment in port infrastructure, suggesting a focus on capacity expansion. The company also demonstrates a shareholder-friendly approach with a dividend per share of HKD 0.03254, providing a yield based on its current share price and earnings.

Valuation And Market Expectations

With a market capitalization of approximately HKD 1.33 billion, the stock trades at a P/E ratio near 6.4x based on reported earnings. The low beta of 0.29 suggests the market perceives it as a defensive stock with lower volatility relative to the broader market.

Strategic Advantages And Outlook

As a subsidiary of a larger port group, it benefits from synergies and established infrastructure. Its specialization in bulk agricultural commodities provides a defensive niche. The outlook depends on regional trade volumes, commodity flows, and the efficiency of its expanded capacities from recent investments.

Sources

Company Annual ReportHong Kong Stock Exchange Filings